A case study in problem solving: debtor finance and labour hire

How to confidently commit to new business opportunities that you would otherwise have to forgo due to sheer size.

 

Have you ever been in a position where you have a great opportunity to secure a new project/contract thereby growing your business significantly only to discover that you didn’t have sufficient cash-flow or funding availability to take it on?

 

Problems like this one are far too common for businesses that require an upfront capital outlay prior to seeing any revenue come back from their customers. One industry where this is a frequent problem is Labourhire.

 

Via the extensive efforts of the team at a labour hire company specialising in mining, heavy industry and manufacturing, a great opportunity for significant growth was realised. The Managing Director found traditional bank finance restrictive and inflexible and after considering a few financial alternatives, settled with a Moneytech Confirmed Capital debtor finance facility.

 

Moneytech put a lot of effort into understanding not only the current position of our business, but where we wanted the business to be. They were supportive of our growth plans and were keen to see us grow.

 

Working capital or cash availability is crucial to the success of a labour hire company. The cash needs of the business are immediate when providing a service to a customer as the labour hire provider pay their staff on a weekly basis despite offering their customers up to 60 day terms. These challenges often make the day to day operation of a labour hire company difficult and are particularly damaging to the businesses ability to grow.

 

There are various financial options available to this business, however none are as well equipped to deal with a growing business as debtor finance. Whilst a traditional business overdraft provides a fixed loan amount, debtor finance is able to extend more funds to the labour hire company as they grow their business and increase their sales.

 

With a debtor finance facility in place, this business was able to confidently tender for larger contracts, safe in the knowledge that the facility would extend them the cash necessary to pay the wages aligned with that contract. Debtor finance was the only form of finance that allowed this company to scale their borrowing with the needs of the business. Additionally, throughout quieter periods when the business required less of a cash injection the debtor finance facility was easily scaled down and the costs facility costs scaled down proportionally.

 

The Managing Director briefly describes the impacts the new debtor finance facility has had on his business – “With the support of a debtor finance facility I was able to approach prospective clients with confidence in not only my workers, but my businesses ability to service those larger clients. I can now commit to growing with my clients as their needs grow and this has added immeasurable value to my service offering.

 

To learn more about how having the correct financial structures in place can drive the success of your business, please contact us.

 

Moneytech is an Australian commercial finance organisation specialising in Trade Finance (Credit Express) and Debtor Finance (Confirmed Capital). We aspire to become trusted partners of our customers.  We support their growth by both understanding their business, and creating innovative financial products based on their feedback which fulfils their needs. Continue to our web site to learn more, or call us on 1300 858 904.