When a business advisory referral partner was presented with the opportunity to assist in the start-up of a labour hire company, they engaged Atlas to source and secure the necessary working capital to support the venture in its initial launch and growth phases.
The Director had previous experience working in the sales side of another labour hire firm and decided it was time to take their destiny into their own hands and start a new business engaging with their existing contacts. Given no restraints were on the past employee the set up and immediate clientele was a straightforward process. The critical issue was the timing between payroll obligations and credit terms on invoices issued. Given the new nature of the business, traditional bank funding was not an option for the Director as they wanted to ensure personal assets (personal residence) were not tied to the business and its funding. An Invoice Finance facility was the logical solution whereby the cash flow was accelerated to the day the invoice was issued for works completed – with invoices being issued on a weekly basis and payroll on a fortnight requirement the facility worked perfectly for the company.
The financier who implemented the facility took a very commercial view of the application and underlying transaction. By understanding the skill set of the Director, contracts immediately available and executed by clients, business advisory partner to support the operational side of the company and the Director’s personal asset backing which could be leveraged to support the business if the need arose.
An additional critical part of the review process for the financier was the strength and spread of debtors. Majority of the clients were well established businesses with credit checks verifying no underlying issues. In addition to the tenor of the debtors, the number of clients provided a good spread or limitation of concentration risk for the funder – there was no real reliance on a single source of revenue to ensure the survival of the business.