Octet Profile Article in The Secured Lender

Octet Finance’s trading card facility is founder Clive Isenberg’s latest endeavor to continue his role as an innovator in the finance industry. Through Octet, the former Factors Chain International Chairman is helping to answer a lender’s common question, “How do you make money from China?”

Octet began operations in the U.S. and Canada to benefit North American buyers that were trading with China and other overseas suppliers. In the U.S., Octet offers factoring companies and asset-based lenders an opportunity to enhance the yields on their customer base by charging a merchant fee to the overseas suppliers for the upfront payment of a portion of the inventory being imported. Not only can it enhance the yield of lenders and factors, but the cost to the factoring client decreases significantly.

“With a well-experienced team on the ground, we are able to facilitate the pro­ cess for U.S. lenders that want to provide their existing clients credit terms from their Chinese suppliers,” Isenberg added. “The added merchant-fee opportunity can increase a lender’s current yield on a typi­ cal 60-day facility by 65 percent, while still saving their current factoring client up to 25 percent and getting them better terms, with no increase to the existing credit risk.”

Octet’s secure web portal opens up to the SME what has been the exclusive do­main of large multinationals over the past two years where supply chain financing has given these conglomerates signifi­cantly improved credit terms from their suppliers. The system is meant to provide interest-free import lines of credit through a closed community communication system similar to the traditional consumer credit card, but with much higher credit limits available. “The Octet Trading Card dynamically assists businesses to acceler­ate their cash flow,” Isenberg explained. “Octet’s working capital solution provides supply chain finance from the time a pur­chase order is confirmed to the eventual receipt of payment from the end customer. This whole process operates through the Octet portal, which facilitates funding for each critical point of the supply chain. It allows businesses to both rapidly collect money that is owed to them by their customers and, at the same time, provides them more time to pay their suppliers.”

Isenberg is no stranger to the factoring industry. He has 25 years of experience in factoring, both domestic and interna­tional, and is credited with introducing the concept to Australia in 1988 when he founded Scottish Pacific Business Finance. Isenberg successfully built the business into the Southern Hemisphere’s largest cash-flow financier at the time of its sale in 2000 to St. George Bank, one of Australia’s major banks. In 2004, after selling his business, Isenberg went to China to not only learn Mandarin but also to try to find a way to set up a working capital financing opera­tion targeting the private manufacturer. “By 2006, and business plan number 28, we concluded that we could not set up a finance company in China, unless you get permission from the central authorities, which is near impossible unless you are a part of a major bank” Isenberg said. “Even­tually, we devised a way we believed would overcome all the red tape, which was the concept of a business-to-business credit card. As we all know, factoring is very much a hands-on scenario, in that you have an administration department that spends a huge amount of time administering, reconciling and collect­ing those outstanding receivables. With our Trading card, you don’t have that massive back office because the trading card does all the work—the collection, administration, reconciliation, and, most importantly, it authenticates and validates each critical stage of the sup­ply chain, especially the verification of the receipt of the goods or services prior to funding.”

Octet Finance officially launched in Australia in February of 2008, and was originally built on the basis of provid­ing financing for Australian businesses purchasing from overseas suppliers, more specifically China. “As any traditional cash flow financier would appreciate, it’s always the aim to start offering finance for work­ing capital at the source, the manufacturer, and then follow the supply chain finance all the way to retailer if possible. To do that, we had to follow the migration and focus on China and see whether we could tap into the financing part of those small- to medium-size manufacturers who were exporting to Australia,” Isenberg explained. The company has since expanded with five offices between Asia and the U.S., focused on assisting the 800 Asia-based suppliers on the Octet Trading System and their North American buyers. With over 20 times as many Chinese goods being exported to North America in comparison to Australia, the opportunity for growth is clear and the potential benefit to partner lending institutions is an exciting prospect. For more information about Octet Finance, visit www.octetfinance.com.

Sourced from TSL Eileen Wubbe is senior editor of The Secured Lender. the secured lender april 2011 31