Fifo Capital Q2 2019 NZ

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Thinking ahead for success QUARTER 2 I 2019

Jan Koum: communication for the digital age How supply chain finance improves cash flow for tech manufacturers Businesses can’t afford to ignore culture Martin Roscheisen: Creating a new diamond industry Businesses need to adapt to take advantage of the gig economy Ben Towers: Entrepreneurship without an age limit

When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability.

When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 0800 86 34 36

is a leading provider of business finance solutions, specialising in solving short term finance needs fast with purpose-fit solutions and one-on-one expert consultancy. With over ten years supporting clients across all industries, our specialists work with the unique complexities of business clients, to identify finance solutions that are appropriate for both short term needs and long term sustainability. Working alongside clients’ financial professional advisers and in harmony with their existing banking facilities, our finance solutions are very often bespoke to each client and designed to fit their specific need at that point in time. Since launching in 2004, Fifo Capital has established more than 70 offices across New Zealand, Australia, United Kingdom, Ireland and Canada, and provided business owners $1 billion growth capital finance.


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Welcome to the Q2 edition of Headway. In an ideal world, a business would only offer what it does really well. But maintaining budgets often means accepting work outside of its core expertise. This not only dilutes the company’s core offering, and opportunity to shine in one area really well, but combined with having to be a Jack or Jill of all trades, this double-whammy adds a lot of unnecessary stress. A lack of focus, and being spread too thinly, can be fatal to your business and your dreams. Remember those? WhatsApp founder, Jan Koum, who sold his business to Facebook in 2014 for $19.3 billion, attributes his success to his focus and dedication to doing one thing really well. In his case, adapting the older technology of Internet messengers for mobile use. You can read his story in the following pages. There comes a point when you need to take the leap from being the face of the company and its primary breadwinner to developing a team of specialists to help you grow. The global “gig economy� has opened the playing field, where you can hire anyone on contract or a freelance capacity. There are many benefits to this approach.

Once you access the right people, developing a good company culture is crucial to retaining your team, especially in a human resource competitive market, and with an aging population. Traditional finance has often dictated when growth could happen. But business finance is light years ahead of where it was even just a few short years ago. Technology allows businesses of any size to compete on the global stage for a fraction of what it used to cost. Fifo Capital has always been at the forefront of FinTech. For example, our potent combination of Trade Finance or Supply Chain Finance and Invoice Finance removes the barriers of traditional loans, and avoids you having to dip into your own working capital. We focus on innovative financial solutions that relieve stress so you can focus on what you do really well. I hope you enjoy these and more inspiring topics inside. Best regards, N igel Thomson Fifo Capital Founder and CEO




















Jan Koum: communication for the digital age Trade Finance lowers barriers for businesses going international How supply chain finance improves cash flow for tech manufacturers B usinesses can’t afford to ignore culture Martin Roscheisen: Creating a new diamond industry Businesses need to adapt to take advantage of the gig economy Sexism is holding back the tech industry globally Ben Towers: Entrepreneurship without an age limit Why importer wholesalers are turning to Supply Chain and Invoice Finance to improve their working capital position Managing a growing global skills shortage

Published by Fifo Capital International Ltd. Headway magazine is published four times a year. Copyright Š 2016 by Fifo Capital International Ltd. Email Visit All rights reserved.



“ Communication is at the very core of our society. That’s what makes us human.” Jan Koum

Jan Koum: communication for the digital age Every entrepreneur dreams of competing in a massive industry armed with nothing but a great product and coming out on top. While he vehemently rejects the label of “entrepreneur”, Jan Koum achieved exactly that with his messenger app, WhatsApp.


The single most popular messaging application both then and now, WhatsApp was sold to Facebook in 2014 for a staggering $19.3 billion USD, and a spot on Facebook’s board of directors. Today, Koum’s net worth is estimated to be approaching $10 billion USD. While he stepped down from Facebook’s board in 2018, he remains formally employed by Facebook, earning hundreds of millions in Facebook stocks.

to doing just one thing well. Unlike many other startup founders, he didn’t develop anything new and visibly disruptive to outcompete larger, better-funded competitors like Facebook, Microsoft, and many others. Instead, WhatsApp simply did a better job of adapting the older technology of Internet messengers for mobile use.

Koum’s success is attributable in large part to his focus and dedication

Born in Ukraine, Koum moved to California with his mother at the

Early Life

age of 16. Pursuing his interest in programming at San Jose State University, he joined a hacker group that included the founders of Napster, Shaun Fanning and Jordan Ritter. At the same time, he started a job as a security tester at Ernst&Young, where he met his WhatsApp’s future co-founder, Brian Acton. One year later, he was hired by Yahoo as an infrastructure engineer, prompting him to drop out of college to pursue his career. For the next decade, he honed his skills as a programmer there, with no clear plans to move into entrepreneurship.

The birth of WhatsApp After purchasing an iPhone in 2009, Koum realized that Apple’s app store would soon spawn its own app-creation industry. He founded WhatsApp just one month later. In its initial form, WhatsApp wasn’t particularly special. It allowed users to send messages over the Internet, which eliminated texting fees and linked accounts directly to the user’s standard mobile number, which significantly improved security over traditional internet messengers, which identified users through simple usernames or email addresses. While it offered some unique value, WhatsApp was not an immediate success. The introduction of push notifications for iPhone users in June of 2009 was the decisive factor. By being able to ping users when they received a message, WhatsApp could now effectively replicate the function of a standard text message. However, users were no longer forced to manage character limits, or additional text message fees, the way they were with traditional SMS. With this, WhatsApp became an obvious replacement for SMS and was rapidly adopted by the public.

Acquisition by Facebook By 2014, WhatsApp boasted an active user base of over 400 million people, making it more popular than any other such service, including

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“ I want to do one thing and do it well” Jan Koum

The app has a simple, user-friendly interface, doesn’t contain any advertisements, and hasn’t bowed to the temptation of monetization that would interfere with the user experience in any way. Moreover, its focus on encryption and data security was instrumental in its initial adoption, though this has been called into question since Facebook’s acquisition.

Facebook messenger. Bowing to the inevitable, Facebook founder Mark Zuckerberg met with Koum in February of 2014 to discuss an acquisition and announced the sale soon after. With a price tag of $19.3 billion, it was the biggest acquisition of a venture-backed business at the time, and Facebook’s largest acquisition to date.

What we can learn Unlike many major tech entrepreneurs, Koum did not found a string of businesses in the hope of finally getting his big break. When asked, he adamantly rejects the label of “entrepreneur”, specifically because he feels that the entrepreneurial desire to make money doesn’t describe him. He also wasn’t strongly motivated by personal frustration, the famous preferred method of


inspiration for Richard Branson. According to Koum, he just wanted to make a useful product. Focusing on utility Koum’s focus on utility has always been evident in his product. Whatsapp offers a wide range of features, allowing users to communicate for free in a wide variety of ways, ranging from private texts, to group calls.

Choosing your moment While the simple utility of WhatsApp played a decisive role in his success, the timing was just as important. By recognizing the potential offered by Apple’s new app store, and moving quickly to develop and release his messaging app, Koum ensured that his would be one of the first professionally designed apps on the market. This granted him greater initial visibility and a measure of incumbency that amplified his success at a critical time.

There are a lot of ways to build a successful business, but Koum’s two keys to success are universally applicable for any entrepreneur. By ensuring that both your product and your timing are competitive, you can give your business the momentum it needs to quickly become profitable and begin to drive its own growth.

Trust Fifo Capital to sort your seasonal cash flows A standby working capital facility ready to access when you need it most.

Simple preapproved facility sitting alongside existing finance arrangements. • Pay only if you use it • Fast and simple to activate • Peace of mind for unexpected cash flow interruptions • Small and large exposures • Treated on a case by case basis, and tailored to your needs

Contact Fifo Capital today for more information. 0800 86 34 36

Trade finance

lowers barrier going international

While politicians might still be issuing opinions about the pros and cons of globalisation, businesses have long come to terms with the reality of competing in global markets. In order to sustain steady growth in the long term, businesses need access to international suppliers and markets. Unfortunately, many businesses face a great deal of difficulty in making that leap. Purchasing internationally traditionally requires a significant investment up front, which many businesses can’t afford without the help of investors. In order to clear this financial hurdle, businesses need access to financing. This is a problem, because a lot of financing options are not only difficult to access, but also inadequate in that they don’t cover the cost of the initial deposit required to make a purchase. Fifo Capital’s trade finance facility, however, comprehensively takes on this issue. With this type of financing, businesses can ship from abroad without being forced to take out traditional loans, and without dipping into their own working capital at all.

International access is critical for growth In order to scale up beyond a certain size, businesses typically need to take advantage of the opportunities


offered by foreign suppliers and markets. By setting up international supply lines, businesses can often reduce costs significantly, which, in turn, allows them to more competitively price goods shipped to foreign markets. Setting up those supply lines, however, is not a simple task. Entering global markets While particular luxury brands might be able to take liberties with their pricing, most businesses rely on competitive pricing in order to sell products. This holds true internationally and plays an important role in how successfully a business can enter a foreign market. The farther a business needs to ship its products, however, the more it’ll be forced to increase those prices. This means that a business that wants to ship and sell its products in faraway markets needs to find ways to reduce its costs, if it wants to be able to compete with local competitors in those markets. Cutting costs In many industries, competing at a large-scale inevitably means outsourcing. A foreign supplier that can take advantage of low labour costs can offer materials at prices that local businesses simply can’t compete with. By building relationships with these suppliers, businesses can significantly reduce production costs without sacrificing

This type of trade financing effectively removes all the financial barriers a business might face with regard to using

ers for businesses

lower cost overseas suppliers. Because no initial investment is required on the part of the business, and because payment can be deferred for up to 90 days, almost any business can then take advantage of the same trade tools that allow very large international businesses to compete globally.

product quality. Those suppliers, however, need to protect their own interests, and their payment terms will reflect this.

The problem with traditional trade finance Trade finance traditionally allows businesses to safely purchase goods internationally while financing the cost for the buyer. However, businesses are almost always required to pay a significant deposit up-front. This is an issue for many businesses, since the facility is traditionally secured against the stock itself. That means the financial institution can’t actually issue the funds to the business in order to pay the supplier until that business already has the stock in hand. As a result, while trade finance does help business to make international purchases, it still leaves businesses to come up with sizeable deposits before they can place any orders. Even for established international businesses, this can present a financial challenge. For growing businesses, who typically face a wide range of financial pressures, this constitutes a significant barrier to entry.

A better way to do trade finance

international relationships, can operate overseas. Instead of securing financing against the purchased stock, businesses can secure their purchases in other ways, including invoices. This makes it possible to finance the entire purchase, including the initial deposit. Extending payment terms Using financing to make a purchase is well and good, but processing the purchased materials, or selling off purchased stock, takes time as well. In order to shorten, or even eliminate, the cash conversion cycle, Fifo Capital allows businesses to extend their payment terms by up to 90 days. Ideally, this is designed to allow businesses to purchase and ship materials, process them, and sell their products before the time comes to pay off those initial materials. This type of trade financing effectively removes all the financial barriers a business might face with regard to using lower cost overseas suppliers. Because no initial investment is required on the part of the business, and because payment can be deferred for up to 90 days, almost any business can then take advantage of the same trade tools that allow very large international businesses to compete globally.

Fifo Capital’s trade finance facility is designed to ensure that any business, regardless of its size and prior

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How supply

chain finance improves

cash flow for tech manufacturers Tech firms need strong cash flow management skills to thrive. While these kinds of manufacturers are seen in the popular imagination as overflowing with cash, the reality is that they face the same financial pressures as other businesses, plus a number of other potential complications. Not only do they rely on long international supply chains, but they also occasionally face astronomical costs without any prior warning. By using supply chain finance, tech firms can reduce the impact of these kinds of cash flow interruptions. Additionally, it allows them to stabilise the cash flow of their suppliers, which helps them to secure the consistent quality and supply costs they need to budget effectively and to pursue growth in the long term.

Cash flow interruptions can be massive Building electronics requires expensive equipment and facilities, and the materials and products they work with are incredibly valuable themselves. If any equipment breaks down or malfunctions, manufacturers are forced to absorb the cost of repairing or replacing the equipment, as well as any defective products. The manufacturing process is typically monitored rigorously to minimise the scope of the effects of any production issues, but even then repairs and losses for a single equipment malfunction can easily rise into the millions. Tech companies need to be prepared to absorb these kinds of costs at a moment’s notice. While they generally earn enough in any



part, can quickly become even more expensive than any initial equipment issue.

Supply chain finance ensures steady payment while freeing up funds In order to operate smoothly enough to succeed in the long term, tech manufacturers need to be able to pay suppliers on time, while also absorbing unexpected costs at a moment’s notice. Supply chain finance is the ideal tool to accomplish this. Rather than paying suppliers out of their own funds, businesses can use a separate credit fund to issue payments instead. That done, the available working capital can be safely redirected to manage a cash flow interruption, without risking late payment to any suppliers. Unlike the business’ suppliers, the financial institution offering the financing can wait to receive payment. Specifically, the balance on the fund can be deferred by up to 90 days (or longer in select cases), giving the business plenty of time to collect revenues or make other arrangements.

given year to cover emergency costs, they can’t afford to sit on a massive emergency fund any more than any other business. In order to compete in the long term, available capital needs to constantly be invested in research and development to drive growth and drawn away to manage emergencies when needed. That means when a cash flow interruption strikes, that capital isn’t readily available.

Tech manufacturers need to avoid supply instabilities A common tactic when dealing with a cash flow interruption is simply to delay outgoing payments. Suppliers won’t be able to immediately pursue a late payment, which is often enough time for the business to redirect those funds to manage their more urgent needs, before applying

incoming revenues to pay supply costs later. For most businesses, this is a risky manoeuvre. Suppliers rely on steady payment to operate effectively, and delayed payments can impact their ability to do good work. Eventually, this can lead to reduced quality, delayed shipments of supplies, and even the loss of a supplier. For tech manufacturers, the risk is significantly higher. Many of these types of businesses rely on complex supply chains that reach all the way around the globe. If a supplier goes under or refuses to work with the business, there might simply not be a practical competitor to switch to. Even if a shipment is just temporarily delayed, it might force production to slow or halt altogether. Those operational interruptions, for their

Paying early to stabilise suppliers and reduce costs Suppliers, like any other business, often run into their own cash flow difficulties. A company that uses supply chain finance can take that opportunity to offer a supplier a helping hand with an early payment— at a price. By issuing an early payment, the business can negotiate for a discount, bringing down supply costs while helping the supplier out of a sticky situation. Supply chain finance fundamentally helps businesses to better manage their cash flow, while creating more stable supplier relationships and keeping costs down. By giving them the resources they need to deal with short term financial issues, they can better plan for and move into the future to build long term financial stability.

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Businesses can’t afford to ignore culture It’s natural for businesses to prioritise their near-term bottom line above all else. Driving growth, managing cash flow interruptions, and investing in innovation for the future is expensive. Businesses who don’t control their costs, or misallocate funds, can quickly find themselves in financial difficulties. Cutting costs in the wrong places, however, can have similarly disastrous consequences, especially in the long term. Investing in the development of a healthy company culture comes with a significant, and often unclear price tag and many businesses choose to simply ignore the issue for that reason. Company culture, though, is an issue that’s far too important to simply ignore. It not only boosts productivity and innovation in a business, making it more competitive, it also helps to prevent potentially dangerous—and expensive— employee behaviour that poor company cultures tend to exacerbate.

What makes a great company culture? Business leaders often focus on a few specific values to try to define their culture. While that can be helpful in developing a plan to build such a culture, it’s more useful to use a more utilitarian definition when evaluating what a good culture looks like. An ideal company culture is one where everyone cooperates to contribute to the success of the business as a whole. This requires a trust relationship between employees, and between employees and their employer. To promote that trust, businesses need to ensure that employees see and experience the value in it, and don’t succumb to cynicism. A business with poor company culture, on the other hand, discourages trust by rewarding selfish thinking and taking advantage of trusting employees through lower pay, higher workloads, and bullying. Just as good company cultures promote cooperation, productivity, and communication, poor cultures increase stress and promote attrition.


Culture affects productivity The productivity of an individual depends on a wide range of factors, not all of which a business has direct control over. A good company culture, however, has the power to boost productivity significantly. This not only makes up for the investment required to actively shape that culture, it also makes businesses far more sustainable and competitive in the long run. Improved engagement A business with a strong company culture empowers people to support each other socially. This reduces mental exhaustion, promotes communication, and keeps people engaged at work. Not only does that mean that employees spend more time focused on their work, but also that they’ll be able to work more efficiently with their peers.

however, building that healthy company culture is also a preventive measure to avoid the potentially ruinous cost of allowing a particularly poor culture to develop. Disengaged employers create resentful employees Poor company cultures increase employee turnover, reduce productivity, and depress morale proportionately. They create an environment in which employees are unable to effectively communicate, and feel no loyalty to either coworkers or their employers. Finding that giving an honest effort or

By making the time and effort to build a strong culture, business leaders can ensure that they’ll have the reliable, effective business they need to allow them to confidently pursue growth, and to support their innovative efforts to become ever more competitive within their industries.

Reduced turnover Retention is an important part of maintaining productivity. When employees leave, the workflow is interrupted while leaders and other employees are forced to make adjustments, delay projects, hire new employees, and find the time and resources to train them. This not only interferes with the productivity of the affected position that was vacated but also those of all of the employees associated with whoever works in that position.

Bad company cultures can disproportionately damage businesses A well-managed company culture can greatly boost a business’ competitiveness, and play a major role in securing its long term success. In a few important ways,

doing hard work isn’t appreciated or rewarding, they’ll become disaffected and disengaged. In this kind of environment, employees naturally grow resentful, and may eventually even seek to sabotage their employer or their coworkers. Rather than simply missing out on the benefits of a healthy company culture, this leaves businesses in a severely weakened state, where business leaders are forced to spend much of their time fighting metaphorical fires in-house, rather than leading a unified and purposeful business. It not only disrupts their operations and reduces their efficiency, but deprives them of the time and resources they need to innovate, and to drive growth. Building a healthy company culture is not a one-size-fits-all task, and the amount of investment required isn’t always the same. While that makes it difficult to plan for, and to implement, it’s no less vital. The short term costs may vary, but the results are consistent in making businesses more unified, productive, and innovative.

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Diamond Foundry cofounders (above, from left) R. Martin Roscheisen, Jeremy Scholz, and Kyle Gazay.

Martin Roscheisen: Creating a new diamond industry Martin Roscheisen has been a key figure in Silicon Valley’s tech startup scene since the 1990s. Since that time, he’s founded, co-founded, or been otherwise involved in the launch of numerous successful startups, most notably including FindLaw, eGroups, and Nanosolar. In 2015, Roscheisen took on his biggest challenge yet: breaking into the diamond industry.

Consumers in the western world, particularly in the American market, are still very attached to the image and tradition of diamond jewellery. While their dominance has waned somewhat, diamonds are still by far the most popular gem for engagement and wedding rings. However, they have become increasingly concerned about the origins of their diamonds. Reporting on the conditions faced by diamond miners, as well as fictional films such as Blood Diamond in 2006, helped to raise awareness about the very real ethical issues surrounding diamond supply chains. Recognising the potential for disruption, Roscheisen and cofounder Jeremy Scholz launched Diamond Foundry in 2015. By capitalising on a new process for growing gem-quality diamonds in the lab, they could produce diamonds


that would not only be less expensive than mined diamonds, but would also have a 100% traceable and ethical source. In doing so, they not only established a successful company, but also managed to unbalance an oligopoly to create a new niche in the diamond industry.

Taking on an oligopoly Consumers might be hungry for disruptions, but entering the diamond markets is no mean feat regardless. While the De Beers monopoly on the global diamond market has been eroding for decades, and was widely declared destroyed in 2014, the diamond market is still almost entirely controlled by a handful of companies. The top 3 companies, led by De Beers, cooperate to control more than 70 per cent of the world’s diamond production. De Beers’ marketing efforts are widely credited with establishing diamonds as the highest standard for engagement rings and luxury jewelry in the 20th century. Leveraging that same marketing prowess, the world’s diamond giants responded by simply refusing to consider their competition legitimate. At first, this worked, but market forces and cultural changes quickly turned the tide.

Turning criticism into a selling point Artificial diamonds have been available on the market for some time, but haven’t been widely

accepted by consumers. Incumbent diamond sellers worked to represent these as “fake” and inferior diamonds, with significant effect on the market. This was partly true, because, until recently, diamonds couldn’t be grown in a lab at gem-quality. Diamond Foundry changed this by pioneering a new process for growing diamonds. With lab-grown diamonds that were qualitatively indistinguishable from mined diamonds available on the market at lower prices, consumers, especially environmentally and ethically conscious millennials began to seek them out deliberately. Today, the lab-grown jewellery market is worth nearly $2 billion.

Putting a giant on the defensive Seeing a large part of their market and more importantly, their future market slipping away, De Beers had to act. In 2018, they launched their own answer to Diamond Foundry, called Lightbox. By entering the artificial diamond market themselves, the company has gone into direct competition with Diamond Foundry, in hopes of recapturing its lost market share. In doing so, however, it has delegitimised its own prior marketing stance that its mined diamonds are the only real option for jewellery.

What we can learn Roscheisen’s approach to entering the diamond industry might seem

obvious, but it’s also ingenious. Instead of attempting to compete with established businesses on their terms, he systematically disrupted them by using their own marketing against them. The world’s diamond companies specifically prided themselves on selling mined diamonds, but the origin of those diamonds was precisely why consumers were ready for an alternative.

Forcing competitors to fight on your terms By opting to grow diamonds, instead of, for example, attempting to ethically source mined diamonds, Roscheisen found the Achilles’ heel of the industry. There is simply no way a traditional mined diamond can be sourced ethically with the same level of certainty that a lab-grown diamond can. This gave Diamond Foundry an advantage that forced established competitors to attempt to meet them on their own ground, nullifying some of the competitive advantage they previously enjoyed. For an entrepreneur, this is a critical insight. When established businesses can successfully influence what consumers want, it can be incredibly difficult to establish a new niche in an industry. By understanding the differences between that influence, and what markets actually want in the real world, entrepreneurs can disrupt and find their place in those industries.

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After the massive layoffs that the UK, Ireland, and other EU countries, as well as the U.S experienced during and after the financial crisis, many young professionals turned to freelance work to support themselves. This was ideal for cash-strapped businesses who struggled to fill every role with full-time staff. Now, a decade later, businesses all over the world rely on this new, often digital gig economy workforce as a part-time or irregular skilled labour pool. Freelance labour comes with many advantages for businesses. Unlike employees, they only need to be paid for the specific work they do, they can be laid off quickly and easily, and they aren’t entitled to any benefits. However, like all new things, this new labour model also comes with a few surprises. Many businesses find themselves unprepared to operate successfully in the gig economy. Due to a lack of planning and inadequate processes, businesses often mistakenly rely on freelance workers like they would their employees, and pay them as they would a business supplier. The typical result is that the business finds itself being fired by its freelancers. Often lacking a proper contract, and having no plan in place to deal with overnight personnel losses, businesses are forced to interrupt projects, and often redo work entirely, resulting in significant costs.

Independence goes both ways The biggest incentive for businesses to use gig economy labour is the lack of long-term obligation involved. It’s important, however, to remember that this goes both ways. Freelancers often cultivate working relationships with many businesses, including direct competitors. They aren’t

obligated to remain with a client who they aren’t happy with and need to act aggressively in their professional self-interest in order to maintain a steady income. To effectively make use of the gig economy, businesses need to put procedures in place to improve labour retention, and to manage the departure of gig workers.

Pay freelancers on time The most common mistake that businesses make is to treat freelancers as business suppliers. Businesses typically operate at least partly on credit, and excruciatingly slow payment is, unfortunately, the norm. Supplier payments are made when revenues come in and are often delayed by days or weeks. Freelancers, however, are not businesses. As private individuals, they rely on regular payment just as heavily as traditional employees do, and a few days’ delays can result in serious personal financial difficulties. A gig worker who isn’t paid on time might finance an invoice once or twice to manage the shortfall, but they won’t turn to financing to deal with the issue in the long term. Instead, they’ll simply find new clients, and fire the delinquent business at the first opportunity. To avoid this, it’s essential that businesses implement specific processes to pay gig workers in a timely manner. That means briefing managers on the importance of approving freelancer invoices and ensuring that they’re properly processed in the current payment cycle. Freelancers, for their part, should be informed by what time invoices need to be submitted to be duly processed, and when payments will be issued.

Always operate under contract

Businesses often attempt to avoid signing any official contracts with gig workers, preferring a more informal relationship, especially with regard to international or digital workers. Lacking a contract, no clear legal relationship exists. This removes any potential barriers to laying off a worker instantly or delaying payment as needed –sometimes indefinitely. Particularly digital workers often operate internationally, and usually lack any recourse in situations like this. Not only is this kind of behaviour unprofessional and damaging to its ability to work with other freelancers in the future, it also leaves it vulnerable in turn. Contracts always exist to protect both signatories. Through a contract, a business can clearly define their project, as well as the associated responsibilities of both parties, and precisely what happens if one party fails to honour its end of the transaction. A contracted freelancer can be bound to give notice before ending a relationship and can be required to return documents, or to destroy sensitive data at that time. This latter point is critical, because an uncontracted freelancer in another country has no such obligations, and could instead attempt to capitalise on it. In return, the freelancer can ensure that they are similarly protected from potential pitfalls by defining payment terms and the precise scope of their responsibilities. The gig economy offers a powerful and flexible tool for businesses who learn to use it effectively. By taking the necessary steps to manage the particularities involved, freelance labour allows businesses to cut costs while improving their financial flexibility and gaining access to a broader pool of talent than would be available through traditional means.

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is holding back the tech industry globally While the tech industry leads the world in innovation and represents an enormous portion of the developed world’s economic potential, it lags far behind when it comes to social progress. In an Australian survey by the Human Rights Commission, 29 per cent of women over the age of 15 reported being sexually harassed at work. While that number is high overall, this general figure stands in stark contrast to the rate of sexual harassment in the tech industry.


Within the tech industry specifically, 81 per cent of women indicated harassment in just the last 5 years. In the US, a 2017 study involving Silicon Valley workers found that over a third of women had experienced unwanted sexual advances at work. This, combined with other forms of sexism, also serves to keep women out of positions of power within the industry. Not only does this directly harm millions of female tech employees, but it also has devastating effects on the entire tech industry. Its toxic industry-wide cultural environment has had a noticeable chilling effect on labour participation and has throttled the recruitment pipeline for tech businesses all over the world. This not only limits the growth of the tech industry but also deprives it of some of its most promising leaders.

Lack of advancement opportunity smothers labour participation A study by Indeed found that women leave the tech field at a rate of 45 per cent higher than their male counterparts. The most common reasons cited were a lack of growth opportunities, followed by poor management. In response to this, many business leaders have argued that women need coaching to become more assertive in their pursuit of leadership positions. Research, however, has not borne this out as the actual issue. Multiple other controlled studies have found that women who exhibit assertive behaviour in front of men are generally perceived as rude, untrustworthy, and emotionally

unstable, while identical behaviours were seen as positive leadership qualities in men. Combined with the more overt sexism prevalent in the male-dominated tech industry, this makes women in leadership rare and drives female leadership talent out of the tech sector entirely.

Misogyny is exacerbating the skills shortage In western countries, women represent approximately half of the workforce. In tech, however, they’re deeply underrepresented. In Australia, just 28 per cent of tech employees are women. That figure drops dramatically in the US and the UK, with 24.6, and 16 per cent respectively. As western economies increasingly begin to suffer from a skills shortage, businesses cannot afford any preventable attrition of their talent pool. To combat the issue, businesses and governments in the US, EU, and Australia have launched major programs to encourage more women to enter STEM (Science, Technology, Engineering, Mathematics) fields. Despite this, the number of women entering STEM fields in all of these markets have sunk drastically in the past decade.

This means that, as a direct result of sexism, businesses are suffering from elevated employee attrition, a shrinking pool of new entrants into the field, and all the damage to general morale and productivity that is associated with toxic company cultures. In a word, sexism is very uncompetitive.

Tech businesses need to protect their labour pool Facing long term skills shortages, tech businesses need to address these issues if they want to grow sustainably in the future. To get the workers they need to succeed, the tech sector needs to retain, and then find ways to recover female STEM talent. Improving retention The first and most obvious issue to fight back against is institutional sexism. Businesses need to take sexual harassment seriously and take aggressive steps to eliminate and prevent workplace misconduct by employees and managers. Additionally, businesses can reduce attrition by introducing accommodations that enable mothers to continue working, and by taking steps to ensure that women are afforded the opportunity to advance their careers.

Recapturing talent from other fields The tech industry needs all the help it can get. That means also working to recover some of the many women who have left the tech sector entirely, either to enter other fields or to quit the workforce entirely. A good way to start with this is to consider introducing flexible working arrangements that allow mothers and carers to return to work part-time.

As the demand for their tech talent grows, skilled women will gain increasing leverage in the field. While those businesses who fail to adapt will likely be left behind, those who address sexism in their industry first stand to benefit significantly from the underutilised labour resource that women STEM professionals represent.

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Today, he’s one of the UK’s most celebrated young entrepreneurs, admired for his entrepreneurial vigour and innovative spirit, and watched closely in anticipation of his next big idea.

Ben Towers: Entrepreneurship without an age limit At the age of 11, Ben Towers took on a gig to design a website for a family friend for £50. Finding that he liked the work as well as the pay, he registered on an online freelancing platform and began producing websites on a regular basis. Within two years, he had hired his own full-time freelancers to support him, putting him on the enterprise road.


By the age of 16, Towers made use of a legal loophole to leave school in order to run his business. Then, in 2017, at the age of 19, he merged his agency with another digital marketing business for an undisclosed amount, described as “multiple million pounds”, before exiting the business. Today, he’s one of the UK’s most celebrated young entrepreneurs, admired for his entrepreneurial vigour and innovative spirit, and watched closely in anticipation of his next big idea. Currently, he’s a public speaker leveraging his celebrity to advocate for the potential of young entrepreneurs, and working to lower bureaucratic barriers that stand in their way through his interactions with government officials.

Innovation in youth entrepreneurship

Becoming an advocate

When it came to formally start his own business as a young teenager, Towers faced a number of additional bureaucratic hurdles that traditional entrepreneurs are never forced to consider. Because of his age, Towers couldn’t legally pay employees, or devote the necessary time to run a growing business. After all, minors in the UK are legally required to remain in the education system at least part-time until the age of 18.

Towers received a call from his bank one day inquiring about the number of transactions on his bank account. His response that he was running a business nearly brought down his entrepreneurial ambitions. A child account can’t be used for business purposes, after all, and children can’t legally open a business account. With his assets frozen, Towers was unable to pay his freelancers or to access his hard earned money for himself.

In spirit, these laws are designed to protect children from exploitation, not to prevent them from pursuing entrepreneurship. Towers, however, had no intention of putting his ambitions on hold for half a decade. In order to hire and pay workers, he simply contracted them as full-time freelancers rather than traditional employees. As the business grew, however, he ran into another major issue – school.

To resolve the issue, he contacted the main branch of the bank, who had never dealt with such an issue before. Lacking any precedent, they created an exception allowing him to use his child account for business purposes. Later on, Towers would become the first underage person in the UK to ever open a business account.

In order to run his business, Towers needed a way to break out of the UK education system, which monopolised too much of his time. At the age of 16, he managed to do so by hiring himself as an apprentice at his own business. What ultimately led to him to his current position as a public advocate for young business people, however, was a mundane banking issue.

In 2015, Towers was invited to participate in a discussion with top British MPs to discuss the needs of entrepreneurs in the 21st century. Most of the UK’s leaders, and political leaders around the world, are entirely unaware of the extent to which young people are involved in the modern economy, and how drastically education has changed compared to their own youth. Using technology, young people with an entrepreneurial mindset have access to

Educating elders

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In Towers’ own words, entrepreneurship isn’t about endless preparation and planning, but rather “just giving it a go”. It certainly has worked for him with politicians as well as prominent investors like Richard Branson keeping a close eye on what he’ll decide to do next.

educational and business resources that were practically unimaginable half a century ago.

entrepreneurial attitude will operate legally in an environment that’s prepared for them.

Not only can young people learn professional skills, they can also build professional connections, find customers, and manage finances entirely online. By ensuring that political leaders know that these resources not only exist, but that young people are using them, Towers is ensuring that others who share his

What we can learn


Ben Towers didn’t disrupt any industry or develop any new products or ways of doing business. He also didn’t scale up to develop a massive business. Instead, he built a small but respectable digital marketing agency valued at a few

million pounds. Despite that, he’s a groundbreaking innovator who has helped to redefine entrepreneurship in the UK. His actions as a teenager, rather than representing the crowning achievement of his life, stand as a proof of concept for his business acumen, personal drive, and entrepreneurial potential.

We’re here to help. Business finance when you need it.

Working capital to support and grow your business We know that the working capital your business needs to support and grow can easily exceed what other financiers can approve. And that’s where we can help, with flexible financial options from $10,000 to $1 million. We understand, because we’re business owners like you When you talk to us, you’re talking to a business owner like you. We’re a privately held finance company, which means we can be innovative in our approach and work closely with our customers. We’re all about keeping things simple – from a single point-of-contact who’s also the decision maker, to a 24-hours turnaround time… all with minimal paperwork. We don’t require long term contracts or property security – and it’s up to you when you choose to use our services and when to stop. All with no impact on your existing lending arrangements In fact, banks often recommend us as preferred short-term funding option. And because we work as a complementary service, there’s no need to refinance your current funding facilities. Contact Fifo Capital today for more information

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Why importer wholesalers are turning to

Supply Chain and Invoice Finance to improve their working capital position Wholesalers occupy an important, but difficult position between manufacturers and retail businesses. They work directly with manufacturers to efficiently import goods, and help retailers to access these affordably and without the usual bureaucratic hassle. In essence, they function as a logistics specialist for both their customers and their suppliers. In filling this role, though, large-scale importer wholesalers face significant financial limits.

Importing goods efficiently involves large shipments and suitably sizeable investments. Not only does this limit what smaller importers can work with, it also places them at significant risk if customers fail to pay on time. To manage this, importer wholesalers are using an innovative combination of supply chain finance and invoice finance. Not only does this allow them to mitigate the risk of late customer payments, it gives them the financial power to grow rapidly and to meet the needs of customers of any size.

Preventing financial interruptions Invoice finance and supply chain finance are both ways for businesses to free up additional working capital when they need funds. Used on their own, both are great ways to avoid running out of funds due to interruptions to revenue, unexpected costs, or other cash flow interruptions. Invoice finance Businesses can use invoice finance to give themselves an advance on income that they’ve already earned. If they need additional funds for any reason, they can simply trade an outstanding invoice in to their financial institution for most of its value. The funds are issued within just a few hours, making it a great way to get cash on short notice. The financial institution will then collect


Invoice finance and supply chain finance are both ways for businesses to free up additional working capital when they need the outstanding payment from the client when it’s due, before issuing the remaining amount to the business. Supply chain finance Instead of coming up with additional capital, supply chain finance helps businesses to retain the working capital they already have on hand. Instead of paying suppliers out of their own capital, they can make payments from a separate credit fund. Payments on that fund can then be deferred by up to 90 days, effectively extending longer payment terms to the business.

Getting control of the cash conversion cycle Importers are limited by the amount of money they can invest in import goods. When shipments arrive, are sold, and the revenues are collected, these can then be reinvested in the next shipment. The time between that initial investment, and when revenues are collected is the cash conversion cycle (CCC). The shorter this cycle is, the more often the business can reinvest it to generate more income. A shorter CCC is therefore better, but something remarkable happens if the CCC is reduced to zero. With a CCC of zero, businesses can collect revenues before they need to make the respective investments. This means that, from a financial perspective, they can fill orders of virtually any size, unlocking enormous growth potential. By combining both invoice finance and supply chain finance, importers can seize control of their CCC to achieve this.

How it works

funds. Used on their own, both are great ways to avoid running out of funds due to interruptions to revenue, unexpected costs, or other cash flow interruptions.

will be enough time to purchase, ship, and sell the stock. Those 90 days aren’t always enough time, though. Long customer payment terms, late payments from customers, or logistical hurdles can all delay the process. This is where invoice finance comes in. Revenues need to arrive exactly when they’re supposed to, and the timing needs to be as predictable as possible. Invoice finance allows a business to take full control of their CCC, by eliminating any unpredictable elements. If a payment doesn’t arrive—or isn’t due to arrive—before the balance on the supply chain finance fund needs to be paid, the business simply finances the invoice to cover the payment. While both of these tools are useful in their own right, combining them in this way is a key way for wholesalers to unlock rapid growth potential. With a cash conversion cycle of 0 or less, they can confidently take on larger customers, and grow much more quickly than their finances would otherwise allow. This ensures that they can take advantage of every growth opportunity they’re faced with, and that their future success is limited only by their ability, rather than their resources.

A business that uses supply chain finance doesn’t immediately need to pay the initial investment for an order. Instead, it can simply pay the supplier from the credit fund, and then defer payments on it for up to 90 days. This means that just by using supply chain finance, an importer wholesaler can reduce their cash conversion cycle by that amount of time. In some cases, this alone

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Managing a growing global

skills shortage


Moving into the coming decade, developed countries around the world, from Australia and New Zealand to the US, Canada and the UK and Ireland are facing a growing skills shortage. Compounding this, it’s important to note that some major developing countries are also affected. In the past, developed countries could compensate for skills shortages through immigration, by importing skilled workers from countries such as China and India. However, these countries are today facing their own growing skills shortages due to their own rapidly growing economies and demographic changes. While labour shortages are typically a sign of strong and growing economies, they present a serious challenge to businesses. In this case, the issue presents some unique difficulties, specifically because it’s unclear from where businesses will be able to source the talent they need.

The skills shortage is multifaceted There are several reasons that businesses are having an increasingly difficult time finding candidates with the right skill sets and experience for their needs. The populations of these countries are ageing rapidly, even while much of today’s workforce operates on an outdated model of employment and career development, which compounds the issue further.

Ageing populations are impacting the labour pool In Australia, 15 per cent of the population is 65 or older. In the UK that figure is 18 per cent, while in Germany it’s already above 21 per cent. As these large high-skill economies move forward, they need to find adequate replacements for the retiring workforce. With too few young people entering the market locally, these wealthy economies create a powerful draw for foreign labour. The difficulty now is that

the countries they’ve historically relied on for supplemental labour and immigration are facing the same problem. The number of skilled workers entering the labour market in the coming years simply will not be sufficient to meet the demands of these growing economies.

Business needs are changing faster than workers adapt Just a few decades ago, it was still expected that the specific skills and education someone acquired early in their career would still be relevant at the end of it. Today, many skilled workers spend months developing proficiency with particular technologies that may well be obsolete in just 5 years’ time. In terms of what businesses need today, a skilled worker is not so much someone that has a particular university degree or a background in a particular field, but rather someone who can acquire and apply new skills to perform their role. Unfortunately, many workers haven’t adapted to this way of thinking, and many who have don’t have access to the time and resources to re- and up-skill quickly enough to meet the demands of employers. The result is that more businesses are increasingly forced to compete over an ever more limited pool of skilled workers.

Businesses need to adapt to changing labour conditions Because of the circumstances causing the issue, businesses can’t do

much to grow the future labour pool. However, that doesn’t mean they can’t act to ensure that they have the talent they need going forward. To combat the skills shortage within their own organisations, businesses need to change their approach to employee retention, and how they develop employees over time. Working on employee retention Since the global financial crisis, employees have become far less likely to remain at a single job for more than a few years. Since unemployment was relatively high following the crisis, replacing employees was not an issue. Going forward, however, businesses will need to focus much more on providing incentives for long-term retention. This is because businesses will not only face far more difficulty finding replacements, but they’ll also need to invest far more in training and developing potentially underskilled candidates. Improving employee development programs In order to grow, businesses need skilled workers. In an economy where there simply aren’t enough to go around, the obvious solution is to simply make your own. To do that, businesses will need to encourage significantly more participation in skill development programs than most do today. Additionally, businesses may be forced to invest in more comprehensive training for new employees, who may increasingly not have all the needed qualifications when they show up on their first day.

In the coming decade, the success of a business will rely much more heavily on its ability to acquire, train, and retain the talent it needs than has been the case in the past. By planning ahead, and adapting to the emerging skills shortage now, businesses can find the specific solutions that work best for them before less aware competitors even become fully aware of the magnitude of the problem. Fifo Capital Headway


When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability. When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 0800 86 34 36

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