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Case Studies

Debtor finance for transport businesses

Background and issue	The business is an interstate line haul transport business. Due to rising fuel prices, the road freight business was going through a significant realignment with takeovers and pricing adjustments. The business upgraded its fleet in the two years prior, replacing most of its prime movers and trailers. The corresponding increase in depreciation and high interest finance contracts increased expenses and impacted on the net profit and cash flow of the business. Further, the business needed the cash flow to meet their fuel supplier’s reduced credit terms.
Solution	Our customer had a good spread of high quality, prompt-paying debtors, which made them a good candidate for debtor financing. Our debtor finance solution released 80 percent of their trade debtor invoices within 24 hours, allowing them to pay the fuel supplier on 14-day terms. It also gave our customer the working capital needed to sustain their vehicle fleets. With debtor finance, the business did not have to resort to offering their customers settlement discounts, which would have impacted on profitability.
Facility Size	$1.1 million