Following a restructure and ownership changes to their labour hire and permanent recruitment businesses in 2011, John and Fiona Harland were faced with the challenge of funding new ventures.

Desire

With their assets residing in Australia rather than NZ and with the businesses not having a trading history over three years, the banks were unable to provide facilities without NZ based security. John turned to Scottish Pacific because he was convinced from the initial meeting that the staff there had the desire to make a deal happen within the tight timeframe available, even though it meant working over the weekend. “The service level was terrific”, said Mr. Harland, “it has continued to be so all along. Scottish Pacific understands our business and the challenges of the on-hire industry as pertains to the overriding importance of cashflow. This is fundamental to the viability of our business and is a huge plus for us.”

Unique Challenges

“The facility is flexible and suits our business and the unique challenges of the on-hire industry down to the ground. It solves cash flow issues resulting from paying wages weekly and then having to wait for payment from clients, and it genuinely grows in line with your turnover which can be a problem with an overdraft facility and the necessity to secure this against personal assets.”

In 2001, Cooling Brothers Glass Company was operating with a bank overdraft facility, but within 3 years it had entered a growth curve, that was putting pressure on cashflow. The owner, Paul King, found himself having to re-negotiate with the bank on a regular basis.

Growing Pains

“When you’re growing that quickly you are taking on more debtors, holding more stock, paying more wages; we were struggling to keep up.” Debtor finance enabled Paul’s company to grow by more than 300%.”

Long Term Plans

“We have been with Scottish Pacific for over twelve years now and have been happy with the service over that time. We’re even referring some of our customers to Scottish Pacific. We want our debtors to be able to pay, after all.”

http://coolingbros.com.au

Scott McClymont previously had a debtor finance facility with Scottish Pacific from 1997 through to 2001, before refinancing his Labour Hire business with one of the ‘Big 4’ banks to access an overall funding package.

Confidence

Recently, Scott won a contract with a major ship-building company; one which required a large investment in personnel and of course, cash to pay their wages. Despite having a long history with the bank, they weren’t able to move quickly enough to give Scott the confidence that that they would be supportive going forward. Scottish Pacific was there to help, offering a $1M limit for the debtor and enabling Alton Personnel to take the opportunity to grow its turnover without having to worry about how the increase in business would be funded.

Quick Turnaround

“When I came to Scottish Pacific with my situation, it was a turnaround time of just under two weeks before it was all approved.” Since taking this particular project on, the number of Alton staff engaged has grown from 50 to 150 and Scottish Pacific has increased the limit again, ensuring continuity of funding.

After 12 years as a manager with True Blue Chemicals, Shane Leigh and his business partner Paul McGregor were given the opportunity to buy the business. Whilst they were able to raise the capital required to effect the acquisition, finding the working capital to fund stock holdings in excess of A$1M, with no additional security to offer was a big challenge.

There was also a three week deadline to settle the transaction. The vendors were funding the business via a debtor finance facility with one of the majors and suggested an introduction, but the bank indicated that the timeframe was too tight. It was at this point that Scottish Pacific was recommended and committed to having the funding in place in time, thus ensuring that the newly acquired business would have the required working capital and the opportunity would not be missed.

Two years on, following the successful acquisitions of two more inter-state businesses, both funded by Scottish Pacific, TBC Distribution continues to grow and the owners couldn’t be more delighted.

“We chose Scottish Pacific because we were confident in their ability to meet the settlement deadline. We wouldn’t have been able to buy the business and grow it without them. I wouldn’t change a thing”.

Why Trade Finance?

This clothing importer has two shipments from overseas per annum, for their Winter and Summer season collections.  They have over 30 retailers across Australia and goods are on pre-committed orders, with a large profit margin.  Trade Finance provides the ability to make 90% up-front payment to the overseas supplier allowing the client the ability to make repayment once goods are sold.

Why ScotPac?

After looking into financing options available, the Directors found that other Trade Finance providers had very complex transaction processes, with some requiring supplier accreditation before providing approval.  ScotPac Tradeline has a simple, straightforward and speedy approval process and is less restrictive than other Trade arrangements.  In addition, ScotPac Tradeline develops a working relationship with the supplier which enables us to negotiate with deposit requirement, payment and shipping terms to provide the best deal for our client.

 

Labour hire businesses often have phenomenal wage obligations, and many choose debtor finance as a funding solution this provides cashflow breathing room and allows them to expand

Recruitment business operator Brendan Muller says the labour hire sector has unique cashflow issues because there are so many small to medium operators who, unlike those in other SME sectors, have to make allowances for high wage bills.

Brendan’s firm, New Zealand labour hire specialist North and South Recruitment, runs a lean head office, but at any given time the construction and civil specialists have to pay more than 100 people each week.

The business, which is in its fifth year, was founded with fellow director Ceri John, and provides temporary labour hire for clients who require construction roles including machine operators, carpenters, labourers and a variety of other trades.

“The nature of the business means we may have to carry the wages of our guys for up to two months before we are paid for their work,” Mr Muller said.

“When you might be placing 100+ people at any given time, at an average of say $1000 per week, our wages bill can be quite large.

“Debtor finance with Scottish Pacific has enabled us to deal with this by providing us with the ideal funding solution for this problem.”

Brendan said the directors were keen to use debtor finance when they founded the business in 2013, having had experience of how it worked through their involvement with other recruitment businesses.

“To me debtor finance makes sense, it’s a cost to the business but once you factor it in you really don’t feel it – the great thing is that it doesn’t put a noose around your neck that makes you turn away contracts because you can’t afford to grow,” he said.

“I’d recommend it to any labour hire business, but also to anyone trying to start a business, because in the early days, or in a growth phase, cashflow is always a problem as there are constant tax and wage obligations that can really snowball.

“What we’ve found is that Scottish Pacific has been happy to increase our funding limits as the business grows – the facility we started with has increased exponentially. It’s ideal when you find a facility that actually grows with the business.”

North and South Recruitment’s founders knew they wanted to utilise factoring, it was just a matter of finding a provider who could meet their needs.

“It makes such a big difference that you can pick up the phone to Scottish Pacific and make things happen, you don’t have to wait for a week to get a meeting with a bank official,” Brendan said.

“Scottish Pacific were recommended to us. Their New Zealand staff, who we deal with regularly, have been excellent.”

“We run a lean and fast-moving operation, meaning we are all so time-pressed, with no time to beg or ask for money to fund the business. Having that ease of contact with Scottish Pacific is a huge advantage, their personal touch and availability has been very welcome.”

With the right finance in place, North and South Recruitment has been able to grow.

The business now has a turnover which has doubled in the past year and is on track to double again this year.

Scottish Pacific works closely with recruitment/labour hire business of all sizes and are proud supporters of the Recruitment & Consulting Services Association of Australia and New Zealand (RCSA).

North and South Recruitment is a New Zealand labour hire specialist within the construction and civil industries. Founded by directors Brendan Muller and Ceri John, North and South Recruitment works with New Zealand’s best companies finding the perfect people to fill civil and construction roles including machine operators, carpenters, freight drivers and skilled labourers. www.northandsouthrecruitment.co.nz