A Cambridge-based specialist recruitment business is set for significant growth despite two major customers becoming insolvent as a result of rising fuel costs and the wider economic downturn, after utilising a Debtor Protection policy.
Established in 2006, Excel Technical Consulting provides temporary and permanent skilled engineers for international aviation operators, maintenance companies and aircraft manufacturers.
The firm’s expansion plans were put in jeopardy when two major customers went into administration with a six-figure amount outstanding. This left it with significant outstanding debt which would have considerably impacted its cash flow.
Just months before the failure of its customers, Excel Technical Consulting had put in place a Debtor Protection policy with Lloyds TSB Commercial Finance to safeguard itself against bad debts, both domestically and on exports.
This facility ensured that the company was able to continue trading without feeling the effects of its two biggest clients becoming insolvent.
Alex Hannam, Director at Excel Technical Consulting, comments: “When you’re a relatively new company, a bad debt of this magnitude is a major set-back that can undo a lot of your hard work.
“Up until recently, Debtor Protection provided peace of mind in the event of any of our clients encountering difficulties. We truly realised the potential of the policy when two of our clients went bankrupt, as it allowed us to carry on growing without feeling the effects of the insolvencies.
“In both cases the claims were dealt with quickly and efficiently and didn’t affect our cash flow. We were able to continue trading as normal to replace the business we had lost through those two clients, which was essential for our growth strategy.”
Jenny Heath, Debtor Protection Client Manager, says: “Alex had the foresight to insure his company against bad debts and this paid off when the firm’s two biggest clients became insolvent.
“In the current economic climate, it’s essential that businesses manage risk and ensure they can focus on securing new contracts and continue to grow their company.
“Even businesses which are seemingly very successful may suddenly encounter cash flow problems if even one of their major customers or suppliers becomes insolvent, so debtor protection provides essential peace of mind for firms of all sizes and in all sectors.”
The company has also been factoring with the Recruitment Finance Division since its inception, to enable it to start up without the need for huge investment and to provide access to working capital.
The factoring facility has continually boosted the firm’s cash flow by releasing the value of its sales ledger and bridging the gap between the time invoices are issued to when payment is received.
Alex continues: “Over the past three years, the factoring facility provided by Lloyds TSB Commercial Finance has ensured we have sufficient working capital to enable us to grow and secure major new clients in the airline industry.
“By advancing the value of our sales ledger, the funding has also meant we’ve never had to turn down business and can run a payroll of up to £150K a week.
“The factoring has also enabled us to grow our exporting services as payments are made in both Euros and Sterling. This flexibility has proved particularly beneficial given the current exchange rate.”