The client was a privately owned long haul transport business. They had never heard of factoring. They were trading well, Dad drove one truck and Son drove the other. Everything was going well enough so they decided to purchase a new Truck (Prime Mover). Not long after that, a friend of the family died and they attended the funeral.
On the day of the funeral a transport job that needed to be completed, so they hired a part-time driver for the deliveries.
He was in the brand-spanking-new truck. Unfortunately, the driver “rolled” the brand-new truck and it was a write-off. The driver was not injured.
Well, now the family business had one truck out there earning a dollar. They still had to make payments on the damaged truck.
Insurance companies being insurance companies, they delayed and delayed some more while they investigated the claim to see if there’s a way to avoid a payout.
Eventually, the mortgage on the family house was maxed out. The family credit cards were maxed out, and even friends and family maxed out their credit cards.
They were almost out of business and the bank would not help their business with any additional working capital.
It seemed like all hope was lost when a friend referred to a Factoring company that understood transport and how it works.
By factoring their freight notes they found an immediate cashflow solution. Instead of waiting for 30, 60 and even 90 days for their payments they factored all their invoices and that changed they’re lived and the way they looked at their business. Unpaid sales invoices became cashflow now without having to wait until the normal payment terms.
The invoice factoring company was able to process settle their new factoring facility within three days. They had more than $100,000 in debtors so they were advanced over $80,000.
Because the debtor finance facility settled within three days they had a very efficient solution to their cashflow crisis.
By turning their unpaid freight notes into working capital available for their business they were able to pay down all the credit cards that had been maxed out and repay the redraws that were taken against their home loan to keep the business going.
What was almost a financial tragedy for a family business was averted and now they can trade and grow.