A successful recruitment agency in Western Australia was facing a series of challenges that were hindering its growth potential. Specialising in labour hire, the company provides contract staff across various blue-collar and white-collar sectors. With over 1,000 successful placements and a reputation for delivering professional, personalised services, the company had become a leader in its field with demand for their services increasing every month. However, despite this success, the business struggled with cash flow instability – a challenge that was hindering their ability to grow and take advantage of customer opportunities.
The challenge of unpredictable cash flow and missed opportunities
The company’s primary issue was that its sales growth had outpaced the restrictive invoice finance facility (also known as debtor finance) provided by their previous financier. The business had been relying on invoice financing to maintain cash flow, but the parameters of that particular facility were proving unreliable.
As the business could not predict how much funding it could draw each week, it became increasingly difficult to take on new customers, increase business with existing customers, manage payroll, and meet increasing tax and super obligations. The inability to access sufficient cash flow on demand created a constant feeling of uncertainty, limiting the company’s ability to scale. The levels of funding generated against invoices and specific customers were inconsistent, making it difficult for the company to plan their cash flow. This unpredictability was particularly damaging given a critical requirement of a labour hire business is to manage timely payments of the weekly payroll for its contractor base.
The company found themselves in a frustrating cycle. Certain key clients were eager to expand their relationship with the company. However, the business was forced to turn them down or limit the amount of work they could accept due to the lack of sufficient funding. This situation not only created missed sales opportunities, limiting their growth potential, but also impacted their profitability.
Seeking security via a tailored working capital finance with Octet
Recognising the urgent need for a more reliable finance partner, the labour hire the company reached out to Octet, seeking a way to improve cash flow and streamline its financial operations. After a thorough assessment of their financial situation, Octet’s Director of Working Capital Solutions – WA, Nigel Thayer, structured a tailored solution that would address their cash flow challenges and support their growth ambitions.
“We knew we could structure a facility that not only generated significantly more cash for the business but would allow them to take on more work, all while having confidence in their weekly funding levels,” Nigel explained.
Octet provided a comprehensive finance package including an increased $1,750,000 Debtor Finance facility that was designed to release the cash tied up in unpaid invoices. With this facility in place, the company was able to access a much larger portion of their receivables, ensuring they had the liquidity needed to operate smoothly. The Debtor Finance package provided the business with certainty on the levels of funding available to each of their debtors, which provided a significant funding enhancement over its existing financier.
To add a further layer of comfort to the business owner, Octet introduced a ‘Whole of Turnover’ Buyer Protection insurance package. This coverage underpinned the debtor finance line, protecting the business from the risk of debtor insolvency. In simple terms, this meant the company could be confident that if any clients were unable to pay their invoices through an insolvency event or protracted default, the insurance would cover those debts, mitigating the risk of bad debts.
“This dual approach was designed to not only generate significantly more cash for the business but also to provide a safety net against potential bad debts,” said Nigel. “It is the perfect combination for a fast-growing business and I’m really pleased we could deliver our solution and release the shackles that were holding this business back”.
The benefits of accelerated growth and increased protection
Since transitioning to Octet, the business has seen both immediate and longer-term benefits. With access to more than double the funding they had previously, the company now enjoys the financial flexibility to meet payroll, cover operational costs, and take on more work from existing clients. This has enabled them to expand services and secure larger contracts, leading to greater revenue opportunities.
“The inclusion of Buyer Protection has given the business peace of mind, as they no longer worry about clients going insolvent and leaving them with unpaid invoices,” says Nigel. “This added security has allowed them to focus on growth without constant cash flow concerns.”
Octet’s financial package not only provided more funding and better protection but also came at a lower cost than their previous financier, who offered no protection against bad debts. This improved cost efficiency has had a direct positive impact on the business’s bottom line.
With a solid financial foundation in place, the company is now positioned for sustainable growth and can confidently plan for the future.
Grow your business with Octet
The right working capital solution, paired with Buyer Protection, can transform a business’s ability to scale and thrive. When added to our Debtor Finance facility, Octet Buyer Protection safeguards your business from the misfortune of bad debts. For companies in industries such as labour hire, wholesale, manufacturing and other business-to-business based sectors, Octet offers tailored supply chain finance solutions designed to support growth, manage cash flow, and protect against financial risks.
Speak to our team of working capital specialists to see how we can power your business growth today.
Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.
