When a large transport company’s bank refused to extend their overdraft, it seemed like the business was headed for a financial dead-end. Faced with rising costs, fixed contracts, and tightening cash flow, the owners feared they might lose not only their company but also their home. Yet invoice finance provided a lifeline — delivering double the working capital they had requested from the bank, and just in time to save their business.
This is the story of how a flexible financial solution helped a business overcome the rigid constraints of traditional banking.
For years, the transport operator had been a stable player in the line haul industry, boasting an asset base of over $4 million. However, an economic downturn soon exposed cracks in their financial structure. Rising interest rates, surging fuel prices, and increasing wages were squeezing their margins thin. Compounding the pressure, their long-term contracts with key clients made it impossible to renegotiate prices in the short term.
Despite these challenges, the company wasn’t without hope. A return to profitability was on the horizon once new, more favourable mileage rates could be implemented. But the immediate issue was cash flow — the financial oxygen that keeps a business breathing. The owners needed temporary liquidity to navigate this difficult period, and so they turned to their bank, expecting support in the form of a short-term overdraft extension.
The bank, however, had other plans.
Despite holding substantial security — including the company’s fleet, with over $700,000 in equity, as well as personal property — the bank declined their request. For the owners, this decision felt like a betrayal of sorts. After all, they had played by the rules, maintained significant business assets, and had a clear path to future profitability. Why wouldn’t the bank extend an overdraft to bridge the gap?
The answer lay in the bank’s inherently conservative stance. During economic downturns, banks tend to pull back, focused more on protecting their own position than helping businesses weather short-term turbulence. In this case, the bank likely calculated that it was safer to refuse additional lending, even if it meant risking the collapse of a long-time client. With the owner’s personal property already tied to the business loan, the bank had positioned itself to recover funds quickly if things went south.
For the business owner, however, the refusal marked the start of a crisis. Without the needed liquidity, the company’s cash flow became perilously tight. Rising interest rates and higher operating costs only made matters worse, and soon the owners were faced with the very real possibility of losing not just their business, but their home.
As the pressure mounted, the company’s accountant suggested exploring alternatives — one of which was invoice finance. Unlike traditional loans or overdrafts, invoice finance operates on a simple premise: it allows businesses to unlock the cash tied up in unpaid invoices. This would provide the immediate liquidity they needed without adding more debt to their balance sheet.
It was here that Lock Finance stepped in. After a detailed review of the company’s contracts, cash flow forecasts, and financial projections, Lock Finance made an offer: a tailored invoice finance facility that would give the business not just the funds they had originally sought from the bank, but double the amount.
The difference was more than just numerical. Where the bank had seen risk, Lock Finance saw potential. They recognised that while the company was temporarily cash-strapped, its fundamentals were strong. The new mileage rates would soon kick in, and the company’s operations were profitable once those rates were in place. Invoice finance offered a solution that grew with the business. As the company generated more invoices, more cash became available, scaling to meet its needs in real-time.
Of course, none of this would have been possible without the involvement of the business’s accountant. Armed with cash flow forecasts and budget projections, the accountant was able to paint a realistic picture of the company’s financial future. These forecasts provided Lock Finance with the confidence to move forward, knowing that the business had a clear path to recovery.
This was more than just numbers on a page. The accountant’s ability to demonstrate the company’s future profitability was key in securing the finance facility, ensuring that the business could not only survive the immediate crisis but thrive in the longer term.
The mechanics of invoice finance were straightforward but transformative. By unlocking the value of unpaid invoices, the business gained immediate access to cash, which in turn allowed them to keep operations running smoothly. The flexibility of invoice finance was particularly crucial. As new invoices were generated, more cash became available, allowing the business to stay afloat even as operating costs continued to rise.
The facility provided double the overdraft the bank had denied them, and that extra liquidity made all the difference. It not only helped them meet their immediate obligations but also allowed them to repay their existing bank overdraft, reducing the risk to personal assets. For the business owner, this was a rare moment of relief amidst months of mounting pressure.
This experience serves as a reminder to business owners everywhere that traditional banking solutions aren’t the only option when times get tough. The rigidity of banks, especially during economic downturns, can often leave even the most asset-rich businesses vulnerable. Invoice finance, by contrast, offers a more flexible and responsive solution, one that can grow with a business and meet its changing needs.
In this case, invoice finance wasn’t just about covering short-term expenses. It was about providing the business with the breathing room it needed to implement long-term solutions, secure future profitability, and protect the owner’s personal assets.
When the bank refused to extend their overdraft, putting the owner’s personal assets at risk, this transport operator found a solution in invoice finance. Lock Finance provided a flexible, tailored facility that not only gave them twice the working capital they had initially requested, but also offered a scalable way to manage cash flow going forward.
With the support of cash flow forecasting from their accountant, the business was able to demonstrate a clear path to profitability, securing a financial lifeline that allowed them to survive the downturn and emerge stronger on the other side.
