Industry
Education Technology
Challenge
The Client had won larger contracts that required it to buy hardware well before its customers paid, while a delayed overseas project was holding up cash flow. It needed a facility that could fund supplier payments and provide working capital quickly.
Results
Fifo Capital approved a $200,000 line of credit within nine days of enquiry, with up to $100,000 available as a working capital loan. The Client could pay suppliers for contract hardware and draw working capital from the same limit as its new contracts came through.
Key Product
Line Of Credit
Client Overview
The Client is a Queensland-based education technology business that delivers immersive, technology-led clinical training to universities and healthcare providers in Australia and overseas. Founder-led and established in the early 2020s, it combines hardware, a subscription content library and ongoing device support in a single offer.
The Challenge
The Client had moved from small projects to larger institutional contracts, including a significant international programme. Each new contract required the business to buy and configure hardware before training could start, and customers paid only once product was delivered.
At the same time, the start of its largest overseas project had been delayed. Revenue the business had earned on paper was not yet converting to cash, and the Client needed to fund its next hardware order without waiting for those receipts.
As a young, fast-growing business, its latest financials did not yet reflect the size of its contract pipeline. The Client needed a lender that would look at the contracts, the security available and the nature of the business model, not just historical results.
The Client needed:
- Fast access to funding for supplier payments
- Flexible working capital to manage the gap between delivery and payment
- A single limit that could flex between the two as contracts landed
- An assessment based on security and pipeline, not only past financials
The Solution
Fifo Capital structured a $200,000 line of credit, with up to $100,000 of the limit available as a working capital loan over up to 12 months on principal and interest repayments.
The facility was secured by:
- A second-ranking mortgage over a residential property
- Personal guarantees
- Corporate guarantees from related entities
- General Security Agreements over the borrower and related entities
With the property valued at approximately $1.3 million, the facility sat within a combined LVR of approximately 65%, with available equity covering the full limit.
Supplier payments are advanced on terms of up to 180 days and can be repaid at any time as customer receipts arrive, while working capital drawdowns are repaid on a fortnightly schedule agreed at drawdown.
The Results
- Approved within nine days of enquiry and settled within six weeks
- Hardware for new contracts funded without waiting on customer receipts
- One $200,000 limit covering both supplier payments and working capital
- Flexible repayment of supplier advances as contract revenue is collected
- Structure that can support further contract growth as the pipeline converts
Have a client in a similar position? Talk to our team, or apply for a line of credit online today.
