How a WA labour hire business secured $2M in debtor finance without property valuations

This established Perth labour hire business had built a solid reputation over more than a decade serving the engineering and trades sector. With recent growth and a promising pipeline of opportunities, the business needed to increase their debtor finance facility from $1.25M to $2M to fund expansion.

However, their existing bank presented a significant obstacle. The director also held his private banking with the same institution, including multiple investment properties. When the business requested an increase to their debtor finance line, the bank advised that new valuations would be required on all the director's properties.

This requirement created multiple problems:

• Considerable time and cost for property valuations across multiple assets
• Uncertainty in the property sector making property-backed lending unfavourable
• Business growth tied to personal assets creating unnecessary risk and complexity
• Delayed access to funding whilst valuations were completed, potentially missing time-sensitive opportunities

The business needed a solution that would provide the required funding without entangling personal property assets with business growth, and without the delays and costs associated with property valuations.

The managing director approached their finance broker, who referred them to Octet Finance, recognising Octet's experience with similar refinance situations.

Octet was able to approve a competitively priced $2M Debtor Finance facility, meeting the business's growth needs without requiring property valuations or security over personal assets.

During Octet's assessment, several improvements were identified and implemented:

• Increased facility limit: From $1.25M to $2M, providing additional capacity for growth
• Improved advance rate: Increased from 80% to 85% on invoices, meaning the client would receive a greater level of funding on their receivables each week
• Competitive pricing: Rates that matched or bettered their existing bank facility
• Separation of business and personal assets: Business funding was no longer tied to the director's property portfolio

The Debtor Finance facility allowed the business to access up to 85% of their invoice value immediately, rather than waiting for customer payments. This converted their accounts receivable into working capital that could be deployed to fund labour hire operations and capture new opportunities.

Upon settlement and refinance of the bank's exposure, Octet had a surplus of funds available for the business, placing them in a stronger cash position from day one.

The outcomes included:

• $2M facility limit providing capacity for growth opportunities
• 85% advance rate (up from 80%) delivering more weekly funding
• Immediate cash surplus upon settlement, strengthening working capital position
• Business funding separated from personal property portfolio
• No property valuations required saving time and cost
• Competitive rates matching or bettering previous facility
• Prime position to fund existing and future growth opportunities

The business was now in a position to capitalise on their strong pipeline of opportunities without the constraints and complications of their previous banking arrangement. The director had successfully diversified their loan portfolio, obtaining additional funding at competitive rates whilst securing the business's future and protecting personal assets.

The revolving nature of the Debtor Finance facility meant that as customers paid their invoices, the facility reset—providing ongoing access to working capital as the business continued to grow in the engineering and trades labour hire sector.

For labour hire businesses, managing cash flow between paying contractors and receiving payment from clients is critical. Debtor Finance can provide the working capital you need without tying up personal assets or waiting weeks for customers to pay.

Octet specialises in Debtor Finance solutions for the labour hire sector, with facilities that can be structured independently of personal property portfolios. Whether you're looking to refinance an existing facility or secure new funding for growth, we can assess your situation and provide competitive terms tailored to your business needs.

Talk to our team today to discuss how Octet's Debtor Finance solutions can support your labour hire business. We can assess your situation quickly and structure a facility that separates business funding from personal assets whilst providing the working capital you need to grow.