Moving grain creates revenue, but it also creates costs well before all of that revenue is sitting in the bank.
Around Geraldton, grain moves through a substantial regional supply chain involving growers, carriers, country receival sites and the Geraldton Grain Terminal. CBH identifies Geraldton as one of Western Australia’s major grain export terminals, with grain moving to port by both road and rail.
For transport operators and agricultural businesses involved in that movement, harvest can create a very specific finance problem.
The work is there.
The trucks are moving.
But diesel, wages, tyres, repairs and subcontractors may need to be paid weeks before customer invoices are settled.
That is not necessarily an equipment problem.
It is a funding-the-work problem.
More Loads Can Require More Working Cash
A transport business may normally operate comfortably from its own cash.
Harvest can change that quickly.
More tonnes moved can mean:
More diesel purchased
More driver hours
More subcontractors
More servicing
More tyres
More repairs
More meals and accommodation for drivers working away
Higher insurance and operating costs
Potentially longer hours and additional shifts
All of those expenses can increase before the first batch of additional invoices is paid.
That is why a business can have one of its strongest trading months of the year and simultaneously experience one of its tightest cashflow periods.
After nearly 30 years in finance, this is an important distinction we make at Thrive Broking.
A busy business does not automatically have a cashflow problem because it is unprofitable.
Sometimes the cash cycle simply cannot keep up with the amount of work being performed.
What Are the Customer Payment Terms?
Before looking at finance, we want to know how the transport business actually gets paid.
Does the customer pay in seven days?
Fourteen days?
Thirty days?
Longer?
Is the work invoiced per load, weekly or at the end of a larger job?
Does one customer represent most of the harvest work?
Those details can completely change the finance conversation.
A carrier completing $250,000 of work over several weeks may still need to carry a significant amount of fuel and wage expenditure if customers do not pay until 30 days after invoicing.
The value of the work is important.
The timing of the cash is just as important.
When the Money Is Already Sitting in Invoices
Once work has been completed and eligible business invoices have been raised, debtor or invoice finance may be worth considering.
This is different from simply applying for another general business loan.
With debtor finance, the funding is linked to qualifying invoices and the money already owed to the business.
A lender may consider factors such as:
The size of the debtor ledger
Who the customers are
How long invoices normally take to be paid
Whether one customer represents a large percentage of the ledger
The age of outstanding invoices
The type of work being invoiced
The quality of the underlying debtor book matters.
This is why, when a transport operator tells Thrive Broking that cash is tight despite being extremely busy, one of the first things worth looking at can be the aged receivables rather than immediately reaching for another short-term loan.
The problem may not be a lack of sales.
It may be that too much of the business’s cash is sitting with customers.
Funding the Work Before an Invoice Exists
Invoice finance cannot necessarily solve every stage of the cash cycle.
Sometimes the biggest pressure appears before the business can even raise an invoice.
A carrier may need to fund diesel and drivers for a week or more before enough work has been completed to invoice.
A contractor may need to mobilise staff and equipment before the first claim is raised.
That is a broader working-capital requirement.
Depending on the circumstances, an appropriate working-capital or revolving facility may help fund the operating costs required to deliver the work.
The important distinction is timing.
Before invoices exist, the requirement may be working capital.
After eligible invoices have been raised, debtor finance may become more relevant.
Understanding that difference helps avoid trying to use the wrong finance product for the stage the business is actually in.
Fuel Can Become the Largest Immediate Pressure
Harvest transport can consume substantial quantities of fuel.
The operator does not normally get to tell the fuel supplier:
“We will pay you when our customer pays us.”
The fuel expense comes first.
That makes it worth forecasting the likely diesel requirement before the busiest period starts.
If the business expects additional harvest work, estimate:
Expected kilometres
Number of trucks operating
Likely fuel spend per week
Driver costs
Subcontractor expenses
Servicing requirements
Current cash reserves
Expected customer payment dates
This can produce a much more useful finance request than simply asking for “extra cashflow”.
A lender can understand why the funding is required and how the business expects the position to reduce once customer payments start arriving.
Subcontractors Can Create Another Timing Gap
Transport businesses do not always complete every load with their own fleet.
Additional harvest volume may be handled through subcontractors.
That can allow a business to accept more work without purchasing another truck immediately.
But subcontractors still need to be paid.
If the principal customer pays the transport business in 30 days while subcontractors expect payment sooner, the business carries the difference.
The larger the harvest program becomes, the larger that gap can become.
This is another reason we look at the entire contract cash cycle at Thrive Broking rather than just the headline revenue.
A contract worth $500,000 is attractive.
But if $200,000 of expenses need to be funded before meaningful payments arrive, the business needs a plan for that $200,000.
One Large Customer Deserves Extra Attention
Harvest contracts can sometimes create heavy reliance on one customer.
That is not automatically a problem.
Large grain businesses, processors, agricultural companies and other commercial customers can provide substantial recurring work.
But concentration matters.
If most of the business’s outstanding invoices relate to one customer, a delayed payment from that customer can affect the whole operation.
Lenders considering debtor finance may also look at customer concentration.
This is why it helps to know:
Who owes the business money?
How much does each customer owe?
What are their normal payment patterns?
How much of the debtor ledger sits with the largest customer?
A strong debtor ledger is not simply a large number on the balance sheet.
Its quality and spread matter.
Do Not Automatically Buy Another Truck Because Work Has Increased
More harvest work can also create pressure to expand the fleet.
Sometimes that is the right decision.
Sometimes the business can handle the additional volume through better utilisation or subcontracting.
Before financing another truck or trailer, it is useful to separate two questions.
Does the business need another asset?
Does the business need more working cash?
They are not the same problem.
Buying another truck when the real issue is $180,000 tied up in unpaid invoices may add another repayment without addressing the underlying cashflow problem.
Likewise, arranging working capital will not solve a genuine fleet-capacity shortage.
Nearly three decades in finance teaches you to ask what is actually limiting the business before choosing the product.
Existing Short-Term Debt Can Complicate Harvest Growth
Some operators enter harvest already carrying short-term business finance.
There may be an ATO arrangement.
There may be several equipment loans.
A previous working-capital facility may still be outstanding.
More work can then require another cash injection.
This is where simply adding another loan deserves caution.
If existing repayments are already absorbing significant cash, it may be worth reviewing the broader debt structure alongside the new funding need.
The appropriate answer could still be additional working capital.
It could be debtor finance.
It could involve restructuring some existing commitments.
Or the current facilities may be best left exactly where they are.
The point is to look at the whole position before adding another repayment.
Geraldton’s Grain Supply Chain Makes Timing Important
Western Australia exports around 90 per cent of its grain crop through bulk export, and CBH’s network moves grain from country receival sites towards export terminals including Geraldton. CBH lists the Geraldton terminal with more than one million tonnes of storage capacity.
For businesses servicing that supply chain, transport demand can create strong revenue opportunities.
But strong revenue needs enough cash behind it to keep trucks operating until customers pay.
That is the finance issue worth planning before the busiest weeks arrive.
Bring Us the Numbers Behind the Work
If you operate a grain transport, contracting or agricultural service business around Geraldton and expect harvest work to increase, speak with Thrive Broking before fuel, wages and subcontractor costs start stretching the operating account.
Bring us:
Your expected harvest workload
Major customer payment terms
Current debtor ledger
Weekly fuel and wage costs
Existing business and equipment repayments
Any ATO commitments
The amount of additional cash you believe the business will need
At Thrive Broking, we can look at whether the real requirement is working capital, invoice or debtor finance, an existing debt review or a combination of funding needs.
Do not wait until the trucks are running and payroll is due to work out how the extra workload will be funded.
If the work is there, make sure the cashflow structure is ready to carry it.