The Scenario
Not every growing business fits neatly within traditional lending parameters.
For one Australian logistics and supply chain business, rapid growth had created a significant working capital requirement. As transaction volumes increased, so too did the amount of capital tied up between delivering services and receiving payment from customers.
The business required a funding solution that could support continued growth while providing flexibility as working capital needs evolved.
The Challenge
The company had built a large and diversified receivables book generated through its day-to-day operations.
However, several factors meant a conventional lending structure was not necessarily the ideal solution:
- A significant portion of value sat within receivables and work in progress rather than traditional hard assets.
- Working capital requirements were increasing as the business expanded.
- Customer payment terms could extend well beyond standard trading terms.
- Funding requirements needed to fluctuate alongside business activity.
- The business required a facility capable of supporting future growth rather than simply funding today’s balance sheet.
For many lenders, these characteristics can be difficult to accommodate within a traditional lending framework, particularly where much of the company’s value sits within working capital assets rather than traditional forms of security.
Looking Beyond Conventional Lending Metrics
Rather than focusing solely on traditional security structures, GCI examined the quality of the underlying assets generating cash flow.
The review focused on:
- Historical collection performance.
- Customer diversification.
- Receivables turnover.
- Operational processes.
- Reporting systems.
- Credit controls.
- The mechanisms converting work in progress into receivables and ultimately cash.
Drawing on extensive experience structuring complex asset-backed transactions, GCI was able to assess the opportunity through a different lens.
The strength of the transaction was not found in a single property or fixed asset.
It was found in the quality of the underlying receivables and the systems used to generate, monitor and collect them.
The Solution
GCI structured a bespoke asset-backed finance facility secured against eligible receivables and work in progress.
The structure included:
- Funding against eligible receivables.
- Funding against eligible work in progress.
- A dedicated collections framework.
- Ongoing performance reporting.
- Predefined performance triggers.
- Extensive oversight of the underlying asset pool.
The result was a facility designed around the way the business actually operated, rather than forcing the business into a conventional lending structure.
By aligning the funding structure with the operating realities of the business, GCI was able to provide a solution that supported both immediate working capital needs and future growth objectives.
The Outcome
The business secured a funding platform that reflected how it actually operated.
By leveraging the strength of its receivables and work-in-progress book, the company was able to access working capital without relying solely on traditional forms of security.
The result was a scalable funding solution capable of supporting continued growth while providing the flexibility needed to navigate an evolving working capital cycle.
Most importantly, the transaction demonstrated that where traditional lending frameworks may struggle to accommodate a growth-stage business, a thoughtfully structured asset-backed finance solution can unlock significant funding capacity by recognising the value of receivables, work in progress and the cash flows underpinning the business.
Frequently Asked Question
Asset-backed finance is a funding solution where lending is secured against specific business assets rather than relying solely on traditional security such as commercial property. Depending on the structure, eligible assets may include receivables, inventory, equipment or other income-producing assets.
Receivables finance allows businesses to access funding against unpaid invoices or trade receivables. Rather than waiting for customers to pay, businesses can unlock working capital tied up in their debtor book and reinvest it into growth, operations or acquisitions.
Receivables finance is commonly used by businesses that:
- Generate large volumes of invoices
- Have long customer payment terms
- Are experiencing rapid growth
- Require additional working capital
- Need funding that scales alongside revenue
Industries frequently using receivables-backed lending include logistics, transport, manufacturing, wholesale distribution, labour hire and professional services.
Working capital finance provides funding to support a company’s day-to-day operating requirements. It helps bridge the timing gap between paying suppliers, employees and operating expenses while waiting to receive payment from customers.
Many growth-stage businesses have strong revenue and customers but may have delayed cash flow generation or may not fit standard bank lending criteria.
Non-bank lenders and private credit providers can often assess opportunities more flexibly by considering:
- Asset quality
- Receivables performance
- Cash flow characteristics
- Industry dynamics
- Future growth opportunities
- Transaction structure
In some situations, yes.
Where appropriate controls, reporting systems and verification processes exist, certain lenders may be willing to provide funding against eligible work in progress as part of a broader asset-backed finance structure.
This can be particularly valuable for businesses where significant value is created before an invoice is ultimately issued.
As revenue grows, receivables balances often grow as well.
A well-structured receivables finance facility can provide access to additional working capital as the receivables book expands, helping businesses:
- Fund growth opportunities
- Support larger customers
- Manage longer payment terms
- Navigate seasonal fluctuations
- Pursue strategic acquisitions
Private credit refers to loans provided by non-bank lenders rather than traditional banking institutions.
Private credit managers can often structure bespoke financing solutions for businesses that require flexibility or have more complex funding requirements than standard bank facilities are designed to accommodate.
No.
Many high-growth businesses use receivables finance as a strategic funding tool rather than a liquidity solution.
Receivables finance can help businesses accelerate growth, support larger contracts, improve working capital efficiency and reduce constraints created by customer payment terms.