A bigger contract needed more than just a bigger truck

Winning more work is usually a good problem to have. But for one growing Melbourne transport business, new contracts were putting pressure on cash flow at the same time it needed more equipment to deliver them.

The business had been operating for around four years across refrigerated and general freight and had recently secured additional work from established customers.

To service that growth, it needed new transport equipment.

The immediate request was Equipment Finance. But recent cash flow pressure meant the asset could not be looked at in isolation.

A strong opportunity with a cash flow problem behind it

The business was growing, but a delayed payment from one of its debtors had created a significant knock-on effect.

With cash not arriving as expected, the business experienced several recent banking and fuel related dishonours. That payment conduct made it difficult to support further asset funding based on the Equipment Finance request alone.

Yet the underlying business was still trading, winning work and generating invoices from established commercial customers.
The question was not simply whether the business needed another asset.

It was whether the cash flow position around the business could be strengthened enough to support the opportunity.

Looking at the debtor ledger as well as the asset

Earlypay looked at the business’s receivables and trading activity alongside the Equipment Finance request.

There was a clear invoicing process behind the work being completed. Transport bookings were linked to individual loads, delivery documentation confirmed that the service had been performed, and customer billing could be traced back to the completed work.

That gave Earlypay visibility into the quality of the debtor ledger and the cash that was sitting in unpaid invoices.
Rather than assessing the equipment requirement on its own, Earlypay provided approximately $450,000 in Equipment Finance, supported by a $300,000 Invoice Finance facility.

The two facilities had different jobs.

Equipment Finance helped fund the assets required to take on the additional work.

Invoice Finance provided ongoing access to working capital against eligible customer invoices, helping improve liquidity as the business continued to trade.

Starting with just two debtors

The client was initially cautious about Invoice Finance and did not want to introduce the facility across its full customer base straight away.

So, the facility was structured to start gradually.

Initially, just two agreed debtors were brought into the facility. This allowed the business to see how Invoice Finance worked in practice while maintaining control over which customer relationships were included.

Older and disputed receivables were also kept outside the eligible funding position, including invoices aged beyond 90 days.

This staged approach meant the facility could support the business without forcing it to change the way it managed every customer relationship from day one.

Around $750,000 supporting two different needs

Across the two facilities, the business had approximately $750,000 of funding capacity supporting different parts of its operation.

Equipment Finance addressed the immediate requirement to put the necessary equipment on the road.

Invoice Finance facility helped address the cash flow cycle behind the work being generated by those assets.

Without the equipment, the business could not take full advantage of the new contracts. Without greater certainty around working capital, continuing to fund the day-to-day cost of delivering that growth would remain difficult.

Creating room for the business to keep growing

With the broader structure in place, the business was able to move forward with the equipment it needed and service the additional work.

Revenue continued to grow and the business began strengthening its internal operations to support the next stage of growth, including adding administrative support and improving its financial processes.

The scenario started as an Equipment Finance request.

But the asset was only one part of what needed to be solved.

By considering the client’s debtor’s ledger, cash flow position and equipment requirement together, Earlypay was able to structure funding around both the immediate opportunity and the business supporting it.