Case Study:
Property Investment

Our Customer

A generational family business in the transport industry with over 30 years' history. The business has an extensive road transport fleet, a diverse customer base and over 200 staff.

Challenges

Despite a complete trading history with the same bank, a lack of consistency in Relationship Bankers meant the bank did not keep abreast of changing needs as the business evolved.

The unfortunate result was several separate financing facilities, with interest rates and loan terms not correctly matched to the purpose of the borrowings or the useful life of the assets. Plus, the frustration of an exhaustive credit application process each time the customer wanted to purchase a new truck.

Strategy

The customer requested a Business Review that included an assessment of their banking interests. MCP walked through 15 key questions to ensure a macro understanding of the business, analysed two years of financial performance and requested a 12-month forecast.

Results

• Our review identified working capital challenges due to cash flow funding of assets with a long useful life.
• We highlighted a material difference between accounting and "cash" profit, showing a sound business with a few issues around credit control and inventory management.
• From a credit perspective, the collateral provided by the customer was excessive and the interest rates charged were not reflective of that position.

Add Value

• MCP was able to bring an understanding of the strengths and opportunities inside the business, communicate this in "bank speak", and remove a lot of anxiety.
• As a result, MCP could negotiate favourable lending terms and generate annual interest savings of several thousands of dollars.
• Most importantly, an ongoing mechanism supports the funding of new equipment.