Case Study – Transport

From a start-up business in 1984 with just two trucks, the Collins brothers have taken Talco Transport to a 77-truck concern turning over nearly $19 million a year. Talco Director Bob Collins says adopting debtor finance was one of the best moves the company has made.

“Our first feeling was apprehension – are we doing the right thing? That was very quickly replaced with the feeling – why haven’t we been doing this for years.”

Talco Transport is a family affair. Tom and Les Collins started the business in Townsville in 1984 and were joined by brother Bob in 2000. Today the business has grown from just two trucks to a fleet of 77 prime movers Australia-wide.

“We cart anything to anywhere in mainland Australia,” says Bob Collins. “Today we turn over about $19 million a year and have a good spread of clients including some very large customers such as Toll Group.”

Bob said that in about 2004 the company started to expand rapidly and juggling cash flow was proving a nightmare. The company employs 110 people, including outsourced labour hire. It had weekly outgoings of about $300,000, including payroll and fuel, but often had to wait 30 to 60 days for payment from customers. Funding this lag was strangling growth.

It was through a chance meeting with a Scottish Pacific representative that Talco was introduced to the concept of debtor finance.

“We were experiencing fairly strong growth at the time,” says Bob. “We were basically getting extra work contracts come our way which meant we had to purchase additional pieces of equipment. It is very hard when you are being offered work to turn it down. There is always the possibility that you open the door for other contractors and that is really a door you do not want to open.

“We saw the advantages of debtor finance in supporting our growth. Whether you are growing organically or through acquisitions, it is still an up-front expense. By bringing our cash flow forward, we were able to take on the additional work.”

Bob says initially, the Collins brothers were unsure as to whether debtor finance was for them.

“Our first feeling was apprehension. Are we doing the right thing? That was quickly replaced with the feeling: why haven’t we been doing this for years? We financed half of our book to start off with and it was not that long after that we decided to do all of the book.”

Transport as an industry lends itself to debtor finance in a number of ways.

“The thing is, in this game, you always have freight that is time sensitive,” says Bob. “Time-sensitive freight has to be carried by equipment that is reliable and unless you have the ability within your cash flow to keep turning over your equipment, it will fail and that places your contracts in jeopardy.

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