Atlas was engaged by the company’s external accountant to secure a working capital facility due to growing pains and cash flow issues as an underlying result. The business had been turning away work as they did not have the financial facility to cater for increased wages / contractors and supplies.
The business services mid-tier development sites – low rise apartment construction and mid-scale townhouse developments (generally 20+ units in one site). Whilst construction industry is classified as high risk by several lenders, being an early development stage service provider such as the concrete industry it provides more comfort as the development has only essentially commenced and payment defaults for the applicant were nil.
Two items of complexity were evident on the transaction which resulted in the company being declined by multiple lenders for working capital support. The director was a shareholder of a company that recently went into liquidation and therefore traditional bank funding / overdraft options were off the table. Invoices were issued under progress claims which were subject to liquidated damage clauses (significant dilution in the event of default). Personal residence was tied up in a renovation and no equity was evident. The solution which was evident was to align the company with an Invoice Financier that has the commercial mind set to fund against progress claims. The overall financials of the business were sound and reflected both Net Worth and Profitability which evidenced a sound business.
With the implementation of the funding line the business has now corrected the negative cash flow, creditors have been reduced to back within manageable terms, additional contractors sourced and further workloads / contracts accepted.