Funding freight forwarder with a €2m Invoice Discounting facility

An established Irish freight-forwarding business needed a substantial working capital facility that reflected the way it traded. Bibby Financial Services Ireland structured a €2 million Invoice Discounting facility, giving the business greater independence and a funding structure aligned with its operating model.

The Business

Our client has been operating in Ireland for more than 30 years as part of an international freight-forwarding and logistics group.

The business coordinates the movement of goods into and out of Ireland, bringing together hauliers and other transport providers while managing the documentation, customs requirements and delivery processes involved in moving freight from origin to destination.

Rather than relying primarily on an owned fleet, its role is to coordinate the people, providers and processes required to complete each movement.

The working-capital challenge in freight forwarding 

Freight forwarding business has a particular working-capital dynamic. Costs can be incurred as transport is arranged and goods are moved, while payment from the customer comes later in the cycle. As a result even an established and profitable freight forwarder can still have a significant requirement for working capital. 

Changes within the wider international group created an additional need: the Irish operation needed to establish a working capital facility in its own right.

The business needed a funding structure that reflected how it operated, without relying primarily on additional fixed-asset security.

Funding an asset-light freight business

Once freight movements are completed and customers are invoiced, value is created within the receivables of the business. In this case, the quality and spread of those receivables provided a more relevant basis on which to consider the working capital requirement.

By taking the time to understand the operating model and underlying trading activity, Bibby could structure the funding around the business's eligible customer invoices rather than depending primarily on traditional fixed-asset security.

“Freight forwarding is a good example of why you need to understand how a business actually operates before looking at the funding structure. This was an established, profitable business, but much of its value wasn't sitting in an owned fleet or other fixed assets. By understanding the trading cycle and strength of the receivables, we could look at a funding structure better aligned to the business.”

Ala Browne, Sales Lead at Bibby Financial Services Ireland

A €2 million Invoice Discounting facility

Bibby Financial Services Ireland structured a €2 million confidential Invoice Discounting facility against the business's eligible customer invoices.

The revolving facility provides access to funding of up to 85% of eligible invoice value. A substantial volume of funding was drawn when the facility commenced, reflecting the scale of the immediate working capital requirement. 

The structure gave the Irish operation access to the working capital it required without the same reliance on additional security associated with the traditional funding options it had considered.

• €2million revolving credit facility
• Up to 85% prepayment against eligible invoice
• Funding linked to trading activity

Customer impact

The facility gave the Irish operation immediate access to the working capital it required, while establishing an ongoing source of funding linked to its own trading activity.

With the facility in place, the business has greater certainty in managing its working capital, together with capacity to support its future plans.