Napier Roading Contractor
A Napier roading contractor was referred to me by their accountants last year (Aug 2007). The accountants had correctly anticipated that sooner or later they would need some short term working capital. They had grown very rapidly over the previous couple of years and were now finding that their working capital base was insufficient.
The firm is a sub contractor, mainly on roading projects. In common with similar businesses they have various cash expenses such as wages and fuel which cannot be put off. They have good debtors but sometimes wait up to 50 or 60 days to get paid.
The contractors took their time signing up, but eventually got all the paperwork in place. They did not need us immediately, but then in March of this year (2008) we were contacted by the accountants to see if we could purchase a $49,000 invoice. The debtor had a good track record and signed our paperwork. We were able to advance 90% of the face value up front.
The Napier roading contractor was able to have an
injection of short term working capital
into their business at a crucial time. In effect, increasing their capital base without giving up any ownership or control of their business. This facility will allow them to expand rapidly as and when growth opportunities present themselves.
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