A growing services business secured a significant new client whose payment terms meant the business would deliver the work well before receiving the resulting cash.
Rather than simply looking at the delay in payment, Line Capital considered the business’s growth, stable margins, existing commitments and its longer-term plan for managing the additional working-capital requirement.
The business chose a term loan as an alternative to invoice financing, with the intention of becoming self-funded over time.
A surveying business working mainly in civil construction had come through a difficult period for the sector, with revenue and profitability down on the previous year.
Its pipeline had since picked up strongly, with several new contracts secured with major construction firms.
The extra work, combined with customers’ extended payment terms, put pressure on cashflow as activity returned to normal levels.
Line Capital considered the reasons behind the earlier decline, the strength of the new pipeline, the business’s existing commitments and its track record as a returning client.
A growing welding and engineering business had been managing the gap between completing work and getting paid through a mix of short-term facilities, alongside an arrangement with IRD.
Line Capital looked past the tight short-term liquidity to the wider trading position, including revenue growth of more than 17%, consistent margins and a balance sheet that had strengthened year on year.
The loan refinanced the existing short-term facilities into a single term loan, giving the business a clearer and more predictable repayment structure.
A growing professional-services business had secured a significant new client.
That was positive for the business, but the new customer operated on extended payment terms. The business would therefore carry the cost of delivering the work before the resulting customer payments arrived.
As the volume of work increased, so did the working capital required to support it.
Line Capital looked at the new-client opportunity within the context of the wider business.
The business was already established and growing, with stable margins and sufficient capacity to service additional lending.
The team also considered why the funding was required and what the business wanted the position to look like longer term.
Rather than using invoice financing, the business wanted a term-loan structure that could support the immediate working-capital requirement while it worked towards becoming self-funded.
Line Capital provided a $75,000 SmartLine facility over 24 months.
The funding provided additional working capital while the business took on the new client and managed the gap between delivering the work and receiving payment.
The size of the receivables gap, how long customers take to pay and what is driving the requirement can all influence the funding need.
That’s why the right funding option won’t necessarily be the same for every business waiting on customer payments.
For established small businesses with more modest funding requirements, including working capital, business investment, equipment purchases or growth.
For established SMEs looking to fund working capital, business growth, equipment or investment, with funding to support the next stage of the business.
You don’t need to work that out before talking to us.
Tell us what’s creating the gap, when you expect customer payments to arrive and what’s happening in the wider business. We can look at the requirement, the context and the funding options that may fit.
Use our calculator to see how a simple interest rate compares with its annualised equivalent.
The amount customers owe is only one part of the picture.
We want to understand what created the receivables, who is expected to pay, when that cash is expected to arrive and what commitments the business needs to meet in the meantime.
We also want to understand whether the gap is temporary, part of the business’s normal payment cycle or increasing as the business grows.
That context helps us understand whether funding the gap makes commercial sense and how it may fit with the wider business.
"Better outcomes start with better questions."
Our lending team works with New Zealand businesses across a broad range of funding needs and business situations. The team brings practical lending experience to assessing not just the numbers, but the context behind a funding request.
Tell us what’s creating the gap, when the customer cash is expected to arrive and what the business needs to keep moving in the meantime.
We’ll ask the questions that help us understand the receivables, the wider business context and the funding options that may fit.
The information on this page is general in nature and does not take into account the specific circumstances of your business. Any lending is subject to Line Capital's lending criteria, assessment and applicable terms and conditions.