Understanding the Tariff Impact on Australian Businesses

The US has introduced a 25% tariff on steel and aluminium imports, impacting global trade flows. Australia, previously exempt from certain tariffs, now faces increased costs and uncertainty in trade relations. This shift presents both threats and opportunities depending on your business model:

• Importers will see rising costs on U.S. goods, requiring renegotiations with suppliers or a pivot to alternative sources.
• Exporters may lose competitiveness as tariffs drive up prices for Australian products in the U.S. market.
• Manufacturers relying on overseas materials could face higher production costs, pushing them to explore local supply options.
• Domestic producers may find an opening to replace imported goods with locally manufactured alternatives.

Adapting to these changes requires a proactive approach to secure financial stability using asset finance.

Leveraging Assets to Overcome Tariff Challenges

Rather than resorting to high-cost, short-term unsecured loans, businesses can leverage assets to fund operational shifts, supplier changes, or expansions. Here’s how asset-backed financing can be a game-changer in the face of tariff disruptions:

1. Use Asset Finance to Maintain Liquidity
Liquidity is crucial when facing tariff-related price increases. By using asset finance, businesses can unlock capital tied up in real estate, equipment, or inventory. This approach ensures access to funds without taking on unnecessary debt.
• Real estate-backed financing allows business owners to extract value from commercial or residential properties.
• Equipment financing helps manufacturers upgrade machinery to stay competitive without exhausting cash reserves.
• Invoice financing turns outstanding payments into immediate working capital, helping importers and exporters manage cash flow disruptions.
2. Leverage Assets to Reposition Your Business Model
The tariff impact may require businesses to shift strategies. Whether it’s sourcing from different markets, expanding domestic production, or investing in technology. Having access to capital is essential.
• Importers can pivot to local suppliers by financing initial bulk purchases through asset-backed loans.
• Manufacturers can expand production facilities to capitalize on the reduced reliance on imported goods.
• Retailers can diversify product lines by securing new supplier contracts with upfront financing from their existing assets.
3. Fund Growth Without Strangling Future Financing
One of the biggest pitfalls businesses face is over-reliance on unsecured loans. This can limit future funding opportunities. With asset finance, companies can grow sustainably without high-interest debt obligations that restrict long-term expansion.
• Instead of costly short-term loans, asset-backed lending allows repeated leveraging of appreciating assets.
• Businesses can reinvest the funds strategically, whether for acquisitions, supplier diversification, or technological upgrades.
• Selling assets strategically can serve as a safety net in times of economic uncertainty.

Key Financial Strategies for Businesses Facing Tariff Impact

To navigate the complexities of the new trade environment, Australian businesses should adopt a structured financial approach. Here are critical steps to remain resilient:

Renegotiate Supplier Agreements

Given the tariff impact, suppliers may be open to discussions about pricing adjustments or extended payment terms. Businesses should:
• Explore alternative sourcing options from non-U.S. markets.
• Negotiate bulk order discounts to offset increased costs.
• Establish long-term contracts to stabilize pricing.

Secure Alternative Capital for Expansion

Business growth often requires external funding. Asset finance provides a strategic way to access large capital injections without depleting working capital.

Companies should:
• Consider private capital options, which offer approvals within 24 hours.
• Take advantage of property-backed loans with rates starting at 7% p.a.
• Leverage assets to access up to $100 million in financing for operational shifts.

Invest in Technology and Infrastructure

Modernizing operations can help businesses stay competitive despite tariff-related cost pressures. Using asset finance, businesses can:
• Upgrade software and hardware to improve efficiency.
• Invest in automation to reduce dependency on costly imported labor or materials.
• Expand premises to accommodate increased local production.

Consider Merges and Acquisitions

With tariffs reshaping the market landscape, some businesses may find it beneficial to acquire competitors or merge with strategic partners. Leveraging assets can provide the capital needed for:
• Purchasing distressed competitors at a reduced cost.
• Expanding into new markets via acquisitions.
• Strengthening supply chain stability by acquiring key suppliers.

The Role of Accrutus Capital in Helping Businesses Adapt

Accrutus Capital specializes in alternative financial solutions, helping Australian businesses leverage assets to fuel growth and resilience in uncertain times.

Their services include:
• Private capital access with rapid approvals.
• Flexible loan terms ranging from 3 years or longer.
• Funding solutions from $5 million to $100 million, with LVRs of up to 75%.
• Tailored asset finance options to match unique business needs.

DISCLAIMER

The disclaimer covers content, comments, responsibility, links, government and local laws, jurisdiction and communication methods. None of the contents on this website or blog should be construed as any kind of advice or recommendation. Nothing in it should be taken to constitute a statement that is intended to influence a person or persons in making a decision regarding any investment or financial product. This website or blog does not purport to be complete, accurate or contain all information which its users may require to make an informed assessment of whether to invest in any Offer listed through Accrutus Capital Pty Ltd.

What is Invoice Finance?

• The financier will give you the money upfront at a slight discount.  That provider will then carry that timing difference and credit risk.  And when the time comes, they collect the invoice amount from the debtor when they pay.
• This is a rather unique form of financing that can be extremely powerful when utilized in the right settings.
• It’s been transformational when it comes to working capital solutions.  Here at Accrutus, we’ve seen so many clients over the years benefit from its flexibility and reliability.

5 Powerful Trade Finance Methods

• Instant pay-out.  The speed at which you can access your funds is probably the biggest advantage.  As long as you have an approved account and an acceptable invoice, you can have that money paid out to you in real-time.  This means that you can settle accounts with suppliers on time and keep your business going.  Thus, leveraging the time you’ve saved in the process.
• Supplier bargaining.  Every supplier relationship relies on solid negotiation.  When you’re struggling to meet the deadlines, you find yourself in a very difficult position.  If you’re savvy, however, you can use debtor finance like this to get better deals on your purchases.  In addition, you can take advantage of early payment discounts, and much more.  All of this can greatly improve your operating leverage.
• Shift the credit risk.  Imagine not having to convince a bank to supply working capital on the basis of your company credit record.  Instead, you can use the creditworthiness of your customers to back your application.  This is a big deal for companies that struggle to get traditional bank finance.  It gives them an outlet to fund their working capital.
• Ad-hoc usage.  The very nature of invoice finance is that you can utilize it only when you need it.  This flexibility is worth its weight in gold because you aren’t tying yourself into any long-term contracts.  You can leverage it in an ad-hoc fashion.  All that matters is that you’ve got an invoice to use, and you’re off to the races!
• Not shown on the balance sheet.  This form of financing doesn’t show overtly on the balance sheet.  This can be very useful when sharing financials with investors and other stakeholders.  It keeps things much cleaner and shows a more accurate view of the business.  It doesn’t let cash flow constraints hamstring the long-term outlook.

The Accrutus Cash Flow Solution

Here at Accrutus Capital, we have been offering trade and invoice finance to our clients for some time now.  It’s been incredibly rewarding to see how this alternative method has been so valuable for companies with cash flow constraints.

Working with us, you won’t get the same apathy that you might experience from a bank or another financial provider.  Because our interests are tied to yours, we want to do everything we can to help you grow your operations.  We genuinely care about our clients.

We focus on providing the most flexibility possible at an affordable price that doesn’t eat into your margins.  We also don’t require any security for this financing.  The trade invoices themselves serve as the collateral.  You simply won’t find an easier and more convenient way to solve your cash flow problems.

Call us today to speak with our trade finance specialist. Together we will devise a plan to help boost your cash flow with up to $5 million approved facility ready when you are.

DISCLAIMER

The disclaimer covers content, comments, responsibility, links, government and local laws, jurisdiction and communication methods. None of the contents on this website or blog should be construed as any kind of advice or recommendation. Nothing in it should be taken to constitute a statement that is intended to influence a person or persons in making a decision regarding any investment or financial product. This website or blog does not purport to be complete, accurate or contain all information which its users may require to make an informed assessment of whether to invest in any Offer listed through Accrutus Capital Pty Ltd.