Another Done Deal
Wholesale herbs and spices, selling to retail outlets.
This business has untenable liabilities on its balance sheet and large amounts of mortgage-backed debt (a loan and overdraft). It is also unable to borrow more from existing lenders and is not generating a trading profit to repay creditors. The owners urgently need capital to purchase stock and manage liabilities moving forward.
The client was referred to a liquidator by their accountant, but this is not the best option for the stakeholders of this family run business. In a liquidation they would have lost everything. The business just needs working capital but is not a bankable client due to servicing and a lack of property security to offer any lender.
AIF provided an invoice finance facility whereby we do the collections for the client and offer a full credit-advice facility. All funding on debtors is covered at 85% with the remaining 15% of the invoice value, less AIF’s fee, paid upon receipt of outstanding invoices.
The client is now paying its wholesale herbs and spices creditors, has been able to make payment arrangements on arrears and is buying stock again. The financial position is breakeven on a month-to-month basis following some serious cost saving measures. Profitability will improve further in the coming months.
The company is now purchasing stock forward and buying in bulk, adding further cost savings to the bottom line. The director always wanted to pay creditors on time and continue to trade the business rather than go into liquidation. The director’s life work and passion has been to run his own business and support his family. He has said that Australian Invoice Finance came along at the right time and delivered on its commitments when the banks would not and could not deliver. The company has a positive outlook for the next 12 months of trading which will result in some great outcomes for the business, its owners and the staff.
Find out more about how AIF can help your business take control of cash flow.