Cirralto Ltd (ASX:CRO) has entered into an agreement with Chinese importer James Tyler for A$2 million in Buy Now, Pay Later (BNPL) funding per month to facilitate better trade partnerships between Australian fresh produce providers and Chinese retailers, targeting large chains like Aldi, Costa Coffee, Costco (NASDAQ:NA:COST) Wholesale, Starbucks and City Shop.
The partnership will allow Australian fresh food producers to export with lowered risk, offering upfront payments and controlled custom clearing, enabled through the integration of Fresh Supply Co’s operational data specialisation.
Australian producers are in essence being given the opportunity to access a cash flow injection to support potential increased production and gaining higher certainty over their volume orders and predicted cash flow.
The BNPL funding will be provided by Cirralto with all payments and collection services to be processed and delivered through Cirralto's core product, Spenda.
Supporting Aussie farmers
“As a company, we have a strategic focus on the agricultural segment in Australia, not only because it is a great market opportunity for us as a company, but because we recognise the importance of the industry to Australia and want to facilitate improvements in trade so that Aussie farmers can get paid quicker,” Cirralto CEO and Spenda managing director Adrian Floate said.
“The addition of James Tyler as a lending customer further strengthens our relationships with Mastercard (NYSE:MA) and Fresh Supply Co. We are extremely excited by the potential of these types of opportunities to drive improvements in food distribution and cross-border trade whilst also generating sustainable revenue.”
Cirralto believes Australian fresh produce producers are under-utilising their farming potential due to uncertainty in buyer demand, limiting their earnings.
CRO’s partnership with James Taylor aims to flip this relationship by giving Australian producers direct access to major Chinese fresh food platforms along with pre-determined sales volume.
Providing supply chain certainty
“Working with Cirralto to provide extended BNPL to the Australian export market will provide certainty to the whole supply chain,” James Tyler co-founder James Hutchinson said.
“Because of our unique business structure, we are able to aggregate demand in China for Australian produce and help Australian producers solve their cash flow issues with upfront payment at the start of the season, a time of the year that is always a huge challenge for producers who are faced with high operational costs but no revenue for many months.
“This new partnership provides greater transparency and certainty to both Australian producers and Chinese buyers.”
China remains Australia’s largest two-way trading partner, representing almost a third of our global trade in 2019.
The Department of Foreign Affairs reported that recent economic instability and cash flow pressures, largely driven by the COVID-19 pandemic and exacerbated by trade tensions between the two countries, had reduced trade volume by 3% in 2020.
This agreement, supported by collecting and embedding operational data from the Fresh Supply Co network into the Mastercard Provenance Solution, is designed to ultimately create stronger trade relationships, better trust and greater transparency between Australian producers and Chinese buyers.
Fresh Supply Co CEO and co-founder David Inderias added: “As a supply-chain digitisation company we’ve been working to provide the agricultural business with transparency across the supply chain. Working with James Tyler combines the collective knowledge and resources of all parties to facilitate better access to working capital for the agricultural industry.”
The partnership intends to leverage blockchain and Cirralto’s own supply chain insight to deliver enhanced access to trade finance, improved efficiency and cash flow, lending confidence and data-driven credit decisions.
Agreement details
The agreement has been entered into through referral agreements implemented in July 2021 with Mastercard Asia/Pacific Pte. Ltd, a wholly-owned subsidiary of Mastercard Inc, and Fresh Supply Co Pty Ltd.
Under the terms of the agreement, James Tyler will access BNPL funding with an initial limit of A$2 million.
The agreement will be provided on a rolling term subject to a 6-month minimum, that can be terminated thereafter, subject to a 3-month termination notice. A condition precedent is the execution of final full agreement documentation expected to occur this week.
The exact quantum of revenue from this agreement is not known at this time as the revenue is dependent on utilisation.
It is anticipated that this funding product will enable James Tyler to increase its export volumes in the near term and this is likely to result in a material impact on Cirralto’s revenue.
About the companies
Cirralto Ltd is a feature-based payment company capable of owning transactions from any customer up and down the value chain. Through its core product, Spenda, Cirralto delivers a fully integrated digital payment and business software solution that enables businesses to transform with fast, error-free digital efficiency.
Cirralto supplies industries with a broad range of business-to-business (B2B) payment services, digital trading software and integrated solutions.
James Tyler is a sales and logistics provider of fresh produce in China, founded in 2015 by majority shareholders Tyler Ye and James Hutchinson. They work with Australian farmers and distributors to provide a gateway for trade direct to the Chinese consumer.
China is now the second-largest market for purchasing imported food, a total of roughly A$150 billion.
It offers three key services:
- Product activation - registering products in China;
- Logistics activation - setting up end to end cold chain solution; and
- Sales activation - working as a sales partner to develop a strategy and enable sales in China.
Fresh Supply Co acts as a data layer specialising in capturing operational data and making it consumable by the financial sector. Ongoing data flows allow for continuous credit risk assessment, minimisation of exposure and automated triggering of payments based on meeting specific milestones or criteria.