Case Study 7
The Change Agent
Annual Turnover $10,082,000
This firm started in 2006 as a manufacturer but had to reinvent themselves when their industry declined and eventually closed down. In order to meet their businesses evolving needs, both from a working capital perspective but also internal infrastructural changes and meeting new statutory obligations the business needed to reassess their current financial arrangements with various lenders, consolidate and implement a more robust financial solution that was going to meet their future needs, as well allowing them to become more competitive within their industry.
The MD was well known to PFBSfor many years and consulted with PBFS for a new financial strategy to meet their 3-5 year strategic forecast. The solution was a complex one initially, as there were several lenders involved. A new financier was required to retire some of the existing lenders. A combination of an asset finance loan and trade& debtor finance facility was the ideal option. Trade finance enabled the business to buy materials, both raw thus allowing them 120 days to repay the lender over stage payments. A debtor finance facility was used to assist with weekly/monthly wages and meet the repayment of the trade facility; and the asset loan was established against unencumbered P & E to provide a further injection of cash into the business to the right size exist in gaged creditor payments.
The business cash flow pressure has now eased and the CFO has better control of his budget. The business continues to grow and increased its GP margin, as new supplier discounts are available, given the trade facility pays suppliers upfront rather than paying in 30 days or later (as was the previous situation), overseas suppliers are now being investigated for cheaper raw materials. The directors can now focus on the business & customers rather than spending valuable time juggling their cashflow and managing disgruntled suppliers.