A West Australian labour hire provider was experiencing a depletion in cash flow due to significant sales growth.
Although flourishing, their existing bank would not increase their overdraft limit. This lack of cash flow was causing missed growth opportunities, and they needed another solution fast.
Octet worked quickly to propose and implement a Debtor Finance (invoice discounting) cash flow line, enabling the business to accept new clients and grow profits. Discover how the speedy response allowed this fast-growing labour hire company to achieve its potential.
A booming labour hire business with no room to grow
This rapidly developing labour hire agency providing staff to the Australian oil and gas industry needed more than just steady revenue to succeed.
After experiencing significant growth, taking on new customers and expanding services, they found that their outgoings weren’t in sync with cash flow requirements. The company could not comfortably fund the initial outlay on operations.
As a result, they were losing revenue and new opportunities, despite having a well-performing labour hire business. Nigel Thayer, Director of Working Capital Solutions for Octet, explains.
“In short, their sales growth had outstripped their available working capital position. An innovative facility was required to smooth out the business’s cash flow and enable funding while financing the overall business expansion.”
Immediate funding and a long-term growth solution
After an introduction via a finance broker and an initial meeting, the client immediately saw how Octet could enable their business to grow without restraints.
“Before their introduction to Octet, the client had an overdraft facility from their bank,” says Nigel. “Initially, it had met their business requirements, but it was clear they had outgrown the overdraft limit. Within 24 hours of reviewing their financial information, Octet proposed a $2 million Confidential Invoice Discounting funding solution.”
This solution would allow the client to access a clear line of credit leveraged against their receivables, funding the growth of their FIFO labour hire and other contractor payroll.
And most importantly, this type of funding solution allows businesses to get up to 85 per cent of their invoices paid within 24 hours.
Impressive revenue growth in the first year
The labour hire solutions company finally had the freedom to grow, meaning they no longer had to juggle cash flow, turn away new customers or limit their capacity with existing clients.
Crucially, the business’ growth was financed by the labour hire debtor financing solution implemented by Octet — not the director’s property or assets.
“Business revenues for the group have been $9 million per annum,” says Nigel. “Today, they are on target to reach over $12 million in revenue in this financial period.”
Better still, the client had nothing but praise for the application process. Octet was there to explain every step and demonstrate how the Debtor Finance facility would integrate within the proprietary supply chain management platform from the outset.
A future full of opportunities
Octet was able to provide a successful outcome for a business in an important and growing sector in Australia.
With Octet’s debtor finance solutions, this client gained the confidence to take on new customers and more significant crew placements. And with fewer restrictions on future growth, they can distinguish themselves as leaders in the WA labour hire market.
Explore what’s possible without cash flow limitations
Nigel urges businesses unable to realise their full potential due to restrictive traditional lenders and cash flow issues to contact Octet.
“Octet can structure a solution for your business that solves your immediate cash flow issues while complementing your growth plans,” he says. “Let us tailor a working capital solution for your business.”
Discover your business’s potential with Octet
Need a structured receivables finance solution to help you scale your business? Contact us today.
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.