Eager to continue its impressive growth trajectory, this national labour hire business was seeking a finance partner that could empower its evolution and ensure its success into the future.
This fast-growing business – which services the engineering, manufacturing, logistics, construction, beverage and food production industries – needed to access fast and flexible funding by leveraging the value of their outstanding invoices. Labour hire companies often look to debtor finance facilities such as factoring and invoice discounting, as these solutions enable them to pursue growth opportunities while meeting their ongoing business cost obligations.
That’s where the traditional banks had faltered, and Octet stepped in. Octet’s debtor finance and trade finance solutions gave this profitable and successful industry leader the flexibility to stay on its upward trajectory.
Keeping up with ongoing growth since 2015
Starting as a humble husband-and-wife labour hire startup in 2015, the business now has a national presence, turning over $30 million in 2022. It’s set to almost double that figure in the 12 months ahead.
With such incredible growth, the business outgrew its relationship with a big bank, says Dan Verdon, Octet’s NSW Director of Working Capital Solutions.
“They had a facility with a major bank, but because they were growing so quickly, the bank found it very difficult to increase limits in line with the business’ requirements,” Dan says. “So, in this case, the bank simply couldn’t keep up with the pace of growth, and by the time they were approving a new limit, the business would need another new limit.”
With an ambitious goal of “never saying no to new business, or more business from existing clients”, the company was essentially forced to go against their values in rejecting new work because of a working capital shortfall. A labour hire debtor financing solution was needed. Also generally recognised as ‘invoice financing’, ‘invoice discounting’ or ‘confidential invoice factoring’, this type of finance solution allows for accelerated business cash flow and rapid growth.
Providing solutions for continuing growth
The company’s finance broker and accountant suggested Octet might be a good fit. Dan says, “They identified that their client needed more flexibility and speed from a lender. They did go to market with a few options, but they felt that our product, service and platform would suit their unique needs best.”
The bank attempted to retain the client with a $4 million facility, which they then increased to $6 million, but it still wasn’t enough. Octet provided an invoice discounting facility with a $9 million limit and a trade finance facility with a $100,000 limit.
No more saying ‘no’ to work
In the labour hire industry, if you’re not paying your wages on time, then you don’t have a business, Dan explains.
“The client’s main expenses are, of course, their outsourced staff wages. They pay wages every week. And the businesses was growing so quickly they were concerned that they wouldn’t be able to meet their increasing wage bill with the existing bank product.”
That meant saying “no” to any new work that was beyond the limits of their existing facility.
Octet’s flexible invoice discounting facility critically gave the business the ability to say “yes” to taking on more work. As Dan says: “It’s pretty simple stuff when it boils down to it.”
More spectacular growth ahead
With the power to say yes to new opportunities, this labour hire client is set for a sustained period of outstanding growth.
“The great thing is that Octet can and will grow our finance solutions with the client’s requirements,” Dan says. “Where the fundamentals of the business meet our product criteria, which they did in this case, then the actual lending limit simply follows business growth. We find that this makes for very satisfied and loyal clients, not just in the labour hire game, but across a range of industries.”
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Disclaimer: The following 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.