At Quadrent we take a customer-first approach by working with clients to ensure we can solve their business problems. We have a blog series to highlight some of the problems we have solved and how they may relate to other businesses. If you have a problem to solve stretching across alternative payment solutions; asset management including disposing of assets; IFRS 16 / AASB 16 compliance then we can help find a solution for you.
A DIFFERENT.SIMPLER.BETTER APPROACH TO CUSTOMER PROBLEMS
BLOG #3 NON CORE / NON CAPITAL ASSETS
CUSTOMER PROBLEM
One of Quadrent’s customers is a large independent contract winemaker situated in the Marlborough region of New Zealand. In operation for 15+ years they have experienced significant growth over the last 10 years and needed the right partner to solve a funding dilemma for them.
As with many businesses, accessing capital was critical to ensuring they could achieve their growth goals. They had significant spend each year in purchasing the new oak barrels to be used in their wine flavouring process, hence draining their cash reserves and funding lines.
As oak barrels are used for a relatively short period of time they are viewed as non-core / non-capital items but obviously critical for the process.
As such, they needed a partner who had a deep understanding of the asset and could open up an alternative effective source of capital. Quadrent has leased wine barrels for over a decade and has a strong supply chain process around barrels which enables the realisation of value in different segments of the market.
So, although a wine barrel may practically last for up to 20 years, there is significantly more value in the asset under 5 years as the oak flavouring effectively gets used up.
THE QUADRENT SOLUTION
Quadrent was able to put in place a very cost-effective 3-year rental arrangement to enable the acquisition of new oak barrels required for the winemakers 2019 vintage requirements.
This meant they were able to preserve their core funding lines to further support the growth plans as the original outlay would instead be spread over the term of the lease easing the cashflow requirements on the business.
The rental arrangement was transacted via Sale and Leaseback enabling the customer to pay its suppliers promptly in the knowledge that swift reimbursement would follow from Quadrent, again smoothing cashflow timing in the process.
Furthermore, we offered flexibility on expiry to enable the winemaker to decide at that point in time (as opposed to now) the best outcome for the rented barrels should they decide to retain, return or extend them depending on the businesses position at that point in time.
This is the Quadrent way – a different, simpler, better solution to equipment finance and asset management.
Quadrent is Australasia's leading and most trusted equipment financier and lease portfolio software provider. We enable you to deliver your technology solution via a leasing structure, and manage and report on your lease & asset portfolio for compliance with IFRS 16. Find out more about our services.
LOIS provides you with a consolidated view of all leases within your business structure and full IFRS 16 compliance, whether it be one entity or a global corporate. LOIS refers to Quadrent’s Lease Optimization Information System, which is a fully integrated portfolio and asset management tool for all your IFRS16 lease accounting compliance. We operate it under a master agreement. Plus, we’re the only supplier in Australasia. Read more about LOIS.
If you're interested in understanding more about IFRS 16 Compliance and LOIS, here are a couple of resources we can provide:
- Read more about IFRS 16 considerations and COVID19.
- Read about LOIS features and benefits and the clients that are already on board with us
- Explore the pros and cons of using spreadsheet applications such as Excel for the transition to IFRS 16 with this short whitepaper (15-minute read).
- Let our recent survey results from LOIS customers demonstrate the value of the product (3-minute read)
- Understand the pros and cons of leasing business assets with our whitepaper (15-minute read).
If you found this blog interesting, read blog #1 and blog #2 in our Solving Customer Problems series.
Blog series 1 by Carolyn Monk
You might also like
