Quick Business Overdraft Secured for a Logistics Company in Urgent Need of Capital

• Client: International logistics business headquartered in Berkshire
• Facility: Revolving credit facility secured against trade receivables
• LTV: Up to 80% of average trade receivables
• Delivery Time: 3 weeks

Enness was approached by an international logistics business headquartered in Berkshire that had been presented with an opportunity to provide logistics support for a world-famous sporting event. The contract represented an opportunity for the business to take on larger work, expand its client base and establish a presence in a new area of the market. However, taking on a contract of this scale required a significant amount of working capital that the business did not have readily available.

Timing was also important. With the contract due to begin shortly, the client needed access to funding quickly and wanted a solution that could provide capital without creating unnecessary pressure on its future cash flow.

The client initially approached Enness looking for a conventional term loan. While this would have provided the required capital injection, a traditional facility could have created an aggressive repayment profile or placed a longer-term burden on the business’s cash flow. Either outcome could have restricted the company’s ability to take advantage of further growth opportunities.

During the initial assessment, Enness identified that the business held a significant trade receivables book that could potentially be used to support a more flexible funding structure. The client had previously considered traditional invoice finance, but had found the process cumbersome and ultimately unsuitable for the way the business operated.

Enness therefore explored an alternative facility with a specialist lender. We identified a revolving credit facility that could provide funding against the company’s trade receivables, with an initial facility limit based on up to 80% of average trade receivables.

The revolving structure was particularly well suited to the client’s requirements. Rather than receiving a fixed lump sum and making scheduled repayments regardless of how much capital was being used, the business could draw funds as required and repay them when convenient. Interest was payable on the funds utilised, helping the business manage the cost of borrowing in line with its actual working capital requirements.

The facility also had the potential to grow alongside the business. As the company’s receivables book increased through additional contracts and higher trading volumes, the available funding could potentially increase accordingly, subject to the lender’s criteria. This gave the client a financing structure that could support not only the immediate sporting event contract but also its wider growth plans.

Enness secured the facility within approximately three weeks, giving the business the confidence and liquidity required to take on the new contract without placing unnecessary pressure on its existing cash flow.

This case demonstrates the importance of looking beyond a client’s initial funding request. While a term loan may have appeared to be the straightforward solution, understanding the company’s trading cycle and available assets allowed Enness to identify a more flexible revolving credit facility that was better aligned with its growth strategy.

For businesses looking to access working capital to support new contracts, expansion or increased trading activity, speak to a corporate finance specialist to explore the available funding options.

Risk Warning:
Business finance carries risks. Borrowers should ensure that any facility remains affordable and that a realistic repayment strategy is in place. The availability of funding against trade receivables will depend on the quality, eligibility and value of the underlying receivables and the lender’s criteria. Failure to meet the terms of a facility could result in enforcement action or other consequences under the relevant agreement.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting and lender criteria. Terms and availability will vary depending on individual circumstances, the business and the proposed transaction.