A growing business is always a good time, with new clients and increasing demand. Things can easily get out of hand and simple tasks such as finding the right staff and paying bills can become stressful.
With growth being at the top of the list for the business owner, taking on to much work can be tempting and underestimating the need for adequate cash flow can easily bring the business to a grinding halt.
Accom, a financial solution from AR Cash Flow, was introduced to a commercial installation business in Queensland.
With over ten years experience the owner fell on hard times in the past and has since started a brand new operation in QLD. With no real estate security, previous defaults and no long term trading history it took a creative funder like Accom to understand his business and provide a solution to get him back on track.
The problem:
The business is responsible for completing contract work for commercial fit outs, fit outs such as banks, office suites and shopping centres. The business contracts to larger installations businesses, running three groups of sub-contractors to cover each of the jobs.
The business owner needed to pay his workers every two weeks or face huge problems with future expansion or even completing current work. The major cause for the cash flow problem is the time it takes to get paid for each job, sometimes up to 30 to 40 days, leaving him with a cash flow gap.
This situation is not un-common for growing businesses; the demand for work increases with all current working capital spent on expansion, waiting for invoices to be paid can be stressful in so many ways, especially when demand is high.
“We quickly identified the value of the business, even though the director did not own any property and had some problems in the past; he had excellent customers and an excellent working relationship. The urgent need for working capital was our main concern, with a debtor finance facility setup in five days we had cash flowing to the business taking away the stress from the business owner and restoring the confidence he had to take on more jobs”
Accom was able to give up to 80% of any outstanding invoices owed to the business through our simple invoice factoring product. The money was used for working capital now and in the future so they can pay staff; buy new stock and general operating costs on time and without the stress.
This leaves the business to concentrate on growing, taking on new orders and keeping service levels that are vital to this competitive industry.