Rapid growth can create pressure on cash flow, particularly when customers take 60–90 days to pay. The right funding solution can provide businesses with the flexibility they need to meet immediate costs while putting a longer-term finance structure in place.
A rapidly growing haulier approached Transition Finance after finding that its increasing turnover was creating a short-term cash flow squeeze. With vehicles, drivers, insurance, fuel and other operating costs needing to be paid before customer invoices were settled, the business needed funding to bridge the gap.
Highlights
- £100,000 revolving credit facility secured
- Flexible access to funding when required
- Helped cover immediate business costs and payroll
- Provided breathing space while a longer-term invoice finance solution was arranged
- Invoice finance structured around the business’s ongoing needs
- Business continued to grow and build healthy cash reserves
The Challenge
The haulier had experienced a rapid increase in business, but this growth was creating pressure on working capital.
With customers taking 60–90 days to pay, there was a significant gap between the business paying its own costs and receiving payment for completed work.
The business still needed to cover the ongoing costs associated with running its growing fleet, including vehicles, drivers, insurance and fuel. With payroll and other bills falling due before customer payments were received, the business needed a short-term solution to ease the immediate cash flow pressure.
The longer-term solution was invoice finance, which could help align cash flow more closely with the business’s payment cycle. However, this would take time to arrange and wasn’t going to solve the immediate cash flow requirement.
The Solution
Transition Finance looked at both the immediate cash flow challenge and the business’s longer-term funding requirements.
A £100,000 revolving credit facility was secured, giving the business flexible access to funding that could be drawn when needed.
This provided the immediate breathing space required to meet payroll and other essential business costs while the longer-term invoice finance solution was put in place with a provider that could match the business’s requirements.
The combination of short-term flexibility and longer-term planning meant the business could manage the immediate cash flow squeeze without putting its growth plans on hold.
The Outcome
The revolving credit facility gave the business the flexibility it needed to pay its bills, meet its immediate commitments and weather the short-term cash flow pressure.
Meanwhile, the longer-term invoice finance solution provided a more sustainable way to manage the gap between completing work and receiving customer payments.
The business continued to grow and has since built ample cash reserves, putting it in a stronger position to meet its ongoing commitments and pursue further opportunities.
Could Flexible Funding Support Your Business Growth?
Rapid growth is a positive thing, but it can put unexpected pressure on cash flow when customer payment terms don’t match the costs of running the business.
The right funding structure can provide the breathing space needed to manage short-term pressure while supporting your longer-term growth plans.
Speak to Transition Finance to explore your funding options, 01908 039 489.