The client was a small family-owned interstate transport business. They were doing reasonably well, Dad drove one truck and Son drove another. The business was going well enough to enable them to buy a brand-new prime mover. Unfortunately, soon after that, a family friend passed away and the whole family needed to attend the funeral.
On the day of the funeral there was some work that needed to be done, so they hired a casual driver to do deliveries and, of course, he was in the brand-new truck. Unfortunately the driver “rolled” the brand-new truck and the truck was a write-off. The driver was uninjured.
Now the family business had one truck earning money but they had to continue to make the payments on the damaged truck until the insurance company settled the claim. Of course, insurance companies being insurance companies, they delay and delay while they investigate the claim to see if there’s a way to avoid a payout.
As time dragged on, the mortgage on the family house was maxed out, Mum and Dad’s credit cards were maxed out, the Son’s credit cards were maxed out and even the Son’s girlfriend had been using her credit card to help keep the business afloat until the insurance claim was paid.
They were on the verge of going out of business and the bank would not help their business with any additional funding or working capital.
When it looked like all hope was lost, they were referred to Nova Business Finance by an existing client of Nova’s working capital solution. By using Nova’s factoring facility they would be able to alleviate their short-term working capital difficulty by converting their unpaid sales invoice into cash, usually within 24 hrs.
Factoring is simply a form of business working capital where unpaid sales invoices can be turned into cash so the SME does not have to wait to get paid. Sometimes it’s called invoice finance, sometimes it’s called receivables finance, or even debtor finance, but it all revolves around turning unpaid sales invoices into working capital without having to wait until the normal payment terms.
Nova was able to process their application, and settle their new factoring facility within seven days. As they had just over $100,000 in debtors, Nova was able to advance them about $80,000. Because the transaction was settled within seven days they had a very prompt solution to their working capital dilemma.
By turning their unpaid sales invoices into cash, working capital for their small business “right now” they were able to pay down their credit cards, and repay the capital that was taken out of their home loan to keep the business afloat.