Winning new work without taking on all the risk

For many businesses, offering credit terms is part of winning and keeping work. But when customers are given time to pay, the business takes on the risk of delayed payment or even non-payment.

Staying competitive in a higher-risk market

For this Australian freight business, that risk had become much harder to ignore.

The business had been operating for more than 15 years, supporting a mix of commercial customers across sectors such as construction, wholesale and manufacturing. Like many transport operators, it had significant day-to-day costs to manage, including wages, fuel, vehicle maintenance and subcontractor payments.

To remain competitive, the business needed to offer credit terms. In some cases, customers were also seeking longer payment terms as part of contract negotiations.

Those terms helped the business win and retain work, but they also increased the risk sitting in its debtor book. If a major customer failed to pay, the business could be left carrying a significant loss while still needing to meet its own operating costs.

With insolvencies and payment defaults rising across Australian businesses, the company knew it could not afford to treat non-payment as a remote risk. One unpaid account from the wrong customer could quickly become a serious working capital problem. The business needed more protection against bad debt while still being able to offer the credit terms customers expected.

Targeted protection where it mattered most

Alongside its Earlypay Invoice Finance facility, the business chose to add Debtor Protection as an additional layer of cover for selected higher-risk customers. This gave it targeted protection where the risk was greatest, while allowing the rest of the customer base to be managed as usual.

The addition of Debtor Protection made an immediate commercial difference. Some customers wanted longer payment terms, but the business would not have been comfortable offering those terms without protection in place. Debtor Protection gave it more confidence to move ahead with those arrangements.

Without that protection, the business may have had to decline those terms and risk losing valuable customers.

A better balance between growth and risk

With cover in place over selected higher-risk customers, the business had greater confidence to offer longer payment terms where needed and remain competitive when new opportunities arose. This helped it win and retain work that may otherwise have been out of reach.

Debtor Protection gave the business more confidence to offer the terms needed to win work, while reducing the risk that a customer default could disrupt cash flow and day-to-day operations.