“FlexDesign” sees itself as a “full service” provider for the manufacturing industry. From design and development to the finished product at your premises, we organise and control the processes for production and logistics. With our strong and reliable partners in Switzerland and Eastern Europe, we guarantee a stable supply chain and high adherence to delivery dates.
Brief introduction ODIN
ODIN is the leading provider in Switzerland for genuine 100% purchase and sales financing.
Beat: Grüezi Mr. Stümpig and thank you very much for your time. How did you hear about ODIN?
Markus: As part of the strategy design, the Board of Directors discussed how we finance working capital. Our Chairman of the Board of Directors then proposed the ODIN and its possibilities in purchase and sales financing.
Beat: Why did you choose ODIN’s SCF solution (Supply Chain Finance or Purchase and Sales Finance)?
Markus: We have our roots in Switzerland, but we operate internationally in the project business – just like our customers. There are several reasons in favor of factoring:
• We are a growing company. The balancing act between working capital finance and a rigid bank limit can be a risk. Unforeseen things, such as a customer paying late or not at all, can lead to liquidity bottlenecks and thus become a business problem. This risk is easily eliminated with SCF.
• Another complicating factor is that, especially in the SME sector, banks are not allowed to finance the entire working capital due to regulations. From this point of view, the decision was simple. We can finance orders from purchasing to sales, practically independent of the country. In addition, there is the advantage that the SCF limits are adjusted to the turnover and the projects. So more turnover = more financing.
Beat: How have your customers reacted to SCF (you often hear the argument that customers don’t want it)?
Markus: We have not had any negative feedback from our customers. On the contrary. It is an advantage for the customer to know that his supplier is cleanly financed and that there is sufficient liquidity. It is important for our customers to receive the ordered parts in the right quality and on the agreed date. This is another area where SCF comes into play. In the rating with the suppliers we have a better position, because the payment of our suppliers is immediate. This means that we receive preferential treatment from suppliers. Only the payment office changes, and customers have no problems with that.
Beat: What are the costs for an SCF solution (you often hear that such solutions are too expensive)?
Markus: An SCF solution is more expensive than a current account with the house bank, that is true. But this is only part of the truth. They are two different types of financing. Traditional bank financing is based on the balance sheet. In the worst case, the entrepreneur still has to assume private liability for certain parts. Bank lines are usually rigid. With SCF we have two cost components. On the one hand, the handling and processing fee and, on the other hand, the interest rate on the open items. To be fair, however, one should also calculate the advantages of SCF financing against the somewhat higher costs. By financing the purchase, one can profit directly from the supplier with cash discount and also somewhat better purchase prices. You gain even more trust with the supplier, invoices are paid immediately. Employees who used to work in accounts receivable management can now be involved in order processing and used differently in the business. Accounts receivable management is taken over and frees up time that can be used more efficiently. From a strategic point of view, the SCF process shortens the balance sheet. Thanks to the higher return on equity (ROE) and the massively improved liquidity ratio, one receives better conditions from the bank for other credit facilities (for example investments). From this perspective, the advantages outweigh the disadvantages.
Beat: How much of an impact has SCF had on your internal processes?
Markus: Not at all, actually. Of course, certain adjustments are necessary. Once this is defined, it happens automatically. It also has advantages for us. When we talk to clients or new clients about projects, we know within 24 hours whether the project will be financed or not. That helps in discussions with clients and in price negotiations.
Beat: Where do you personally see the advantages in the SCF for you as an entrepreneur and your company?
Markus: Clearly, we can take care of business and the financing “runs alongside”. The administrative effort is manageable and the exchange with Odin Factoring is very uncomplicated. A weighty aspect is the better relations with our customers and suppliers. Since the financial aspect is removed, the discussions are related to the matter at hand, which helps. The last aspect as an entrepreneur is the financial strengthening of the company. With the SCF process, we significantly improve the company’s financial figures. This gives us room to develop the business even more successfully. Besides, of course, it also relieves the entrepreneur and brings security.
Beat: Thank you very much Mr Stümpfig for your time and the exciting interview. We look forward to continuing to accompany you and your company in this exciting and successful environment.
Markus: Thank you also for your time. We are also looking forward to working together. This partnership will bring us both a lot of joy.