A specialist in providing essential safety resources for rail infrastructure projects, our client has grown rapidly since its inception in 2019, expanding its workforce nationwide. Despite impressive revenue growth in its initial four years, the business faced significant cash flow challenges due to aged receivables and the impact of the pandemic. With mounting financial pressure threatening its expansion, the company turned to a commercial finance broker, who introduced them to Octet and its tailored working capital solutions.
Cash flow strains amidst rapid expansion
The company’s business model, operating on an hourly rate structure across multiple sites, required a sizable workforce to ensure the safety and smooth operation of large infrastructure projects. While their growth was impressive, it also created significant financial strain. A growing number of debtors and aged receivables were tying up the business’s cash, causing shortages and limiting their ability to reinvest in new projects.
The economic disruptions caused by the COVID-19 pandemic only worsened these challenges, with significant expenditures and disruptions leading to losses during 2020 and 2021. Despite their revenue growth, the business was running on tight margins, with an urgent need to access cash to fuel further expansion.
They had been working with a previous financier, but the relationship was costly and too rigid for the company’s growing needs. As cash flow issues persisted, it became clear they needed a more flexible and affordable financial solution.
A tailored working capital package
At this critical juncture, the company turned to their trusted commercial finance broker for advice. With years of experience helping businesses navigate financial challenges, the broker quickly identified that the business’s cash flow problems stemmed from their aged receivables and restrictive financing terms. The broker suggested exploring financing options with Octet, a specialist in providing tailored working capital solutions.
Octet assessed the business’s needs and offered a comprehensive financing solution.
“We were able to tailor a facility that included a $12 million debtor finance facility, which allowed the business to release cash tied up in unpaid invoices, providing immediate working capital for ongoing operations,” said Dan Verdon, Octet’s Director Working Capital Solutions – NSW.
Octet also provided a $100,000 trade finance facility to support the company’s operational needs and a $400,000 term loan to refinance the fleet of vehicles, previously financed by another lender.
With Octet’s flexible financing terms, the company was able to eliminate the restrictive 10% holding limit from its previous lender and gain access to better pricing. “This provided the business with the financial room to reinvest in its operations, complete ongoing projects, and continue expanding its workforce,” added Dan.
Cash flow freedom for future growth
The impact of Octet’s working capital solution was immediate. By unlocking cash flow tied up in receivables, the business was able to pay suppliers on time, meet payroll obligations for its large workforce, and continue bidding for new projects. The trade finance facility helped cover operational costs without depleting their working capital reserves, and the term loan for asset finance ensured their vehicle fleet could continue supporting projects nationwide.
“The combination of the facilities we structured provided the business with a solid financial foundation, allowing management to focus on their core operations without worrying about cash flow gaps,” explained Dan.
The streamlined financial solution also freed up valuable time for long-term strategic planning and growth initiatives.
With the broker’s expert advice and Octet’s support, the business is now well-positioned to continue expanding its safety services across major infrastructure projects in multiple states. Their newfound financial stability, combined with a strong company culture focused on employee well-being, has allowed them to reinforce their presence in the industry and remain a key player.
Grow your business with Octet
Via our Referral Partner Program, Octet empowers businesses across a range of industries, including labour hire, transport and construction, offering innovative Debtor Finance and Trade Finance working capital solutions.
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.
