Cash-flow Squeeze for Taranaki Bricklayer.

This Taranaki case study is a very typical invoice discounting case study. In March '06 a local bricklayer (New Plymouth), was referred to us by his bank manager. He had only been in business for about 2 years but, due to a major building boom, had grown rapidly. He now sometimes had as many as 12 men working for him. This growth was putting pressure on his cash reserves. The bank was unable to extend his facilities. He had a payroll deadline to meet. This was an urgent referral.

He had a number of debtors at that time and chose to sell me an invoice to a builder for $10,100.

We managed to set something of a record with this particular funding. The bank manager rang me at 2.30 on the Thursday. the client and I were able to meet by 4.00pm and there were no problems with the initial paper work. Then, he phoned the builder and explained the deal to him. I went back to the office and faxed through the sign-off form to the builder and initiated a credit check which came back very positive.

The next morning the builder's signed off form was on the fax. I was able to fund the bricklayer 90% of the face value of the invoice by 10.00am on the Friday, less than 18 hours after the initial phone call.

This Taranaki client received further funding for about $2,300 the following month against another invoice. These injections of cash provided the short-term working capital he needed to get his business beyond the cash-flow hump that rapid growth was creating.

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