If one of the biggest rail freight firms in Australia can go through financial difficulties, can your transport business? Of course it can, but you can protect yourself with debtor finance. Aurizon is predicting half-yearly pre-tax financial impairments of $321 million, according to a Fully Loaded article from January 31, due to various unsuccessful internal programs.
In a statement released by the company, external factors are mostly to blame for the impairments:
If you were in a position where you had impairments of a significant value, could you cope without debtor finance?
"There remain considerable challenges within the intermodal market segment and operational requirements have impacted on the cost side such that overall profitability has declined. The detailed process of the freight review has provided greater granularity around operational costs, utilisation of assets and future capital investment."
While Aurizon is a large company with plenty of working capital to fall back on, your smaller freight firm might not be so lucky. If you were in a position where you had impairments of a significant value, could you cope without invoice finance for your transport business?
How are Aurizon in this position?
In 2014-15, Queensland Rail facilitated 18,128 million gross tonne kilometres in the state - split between Aurizon and Pacific National. It's one of the biggest rail freight companies in Australia, and yet, it still finds itself in a slight (by its own standards) financial decline. Overall, the rail freight industry in Australia is worth $8 billion in annual revenue, according to IBISWorld, and it has grown by 2.1 per cent each year since 2012.
It's a major industry to be a part of, yet internal ambitions that ended up not going anywhere have cost Aurizon a lot. The decision-makers started programs in motion and were then at the mercy of external factors, resulting in a reduction to profitability. They didn't have any control over this, and the same thing could happen to your company.
Could you cope during a financial decline?
If your freight company went through a period of financial instability, would it survive without you having to take out major loans from the bank? The alternative solution is to open a ledger with Cashflow Finance and take advantage of your unpaid invoices.
Rather than waiting weeks and weeks for your clients to pay for goods you've already delivered (while your own overheads don't go on pause), you can access up to 80 per cent of the total value of the invoices quickly. This will allow you to expand, pay bills on time and keep up with salary payments.
Struggling with finances may become a thing of the past when you use debtor finance, because you'll have far more working capital available to cope with any unexpected losses. To find out more, contact our team today.