How Naarm Autohaus is maintaining cash flow flexibility on the road to growth

Beyond working with a range of individual customers, Naarm Autohaus also services vehicle fleets for government organisations in Victoria. Sam explains that this aspect of the business and bidding for public sector contracts, presents a key growth avenue.

To service an ever-growing customer base, Sam must procure parts from suppliers, purchase tools and equipment and pay staff. Only once a job is complete will Naarm Autohaus invoice customers. Sam says that for small but growing businesses, having access to cash flow is important to ensure operations run smoothly and that the business maintains its reputation for timely and high-quality servicing.

Sam explains the business has some customers that pay on 31-day terms and during big months for repairs, Naarm Autohaus will have a significant upfront outlay on parts and labour while waiting to be paid. “That puts a strain on our cash flow and limits access to funds we could be using to keep our customers happy and growth plans on track,” Sam says.

After evaluating the best options for the business to have flexible access to funding to bridge such cash flow gaps, he decided to put a CommBank Business Overdraft in place.

Gaining flexibility if, and when, needed

A CommBank Business Overdraft offers businesses unsecured limits of up to $250,000. It provides access to a revolving credit facility with interest charged only on amounts drawn down.

“It’s good just to have that money available, and it provides us peace of mind and confidence,” Sam says. “For example, knowing we can act quickly and have the flexibility to buy equipment as customer needs arise, which is the biggest advantage of an overdraft for us,” Sam says.

“As a small business mechanic, you never know when you will need parts or equipment, which can be expensive. It’s comforting to have the assurance should the day come when something happens, and we need to purchase a part immediately.

Discussing how Naarm Autohaus uses the overdraft, Sam says it can help maintain its supply chain. When the business does draw down on the facility, it is often to pay suppliers promptly. Sam says this is essential to keep these relationships strong and reliable as the business scales.

Sam says that once the business receives the payment from the customer, “it goes straight back to the overdraft account if we ended up using it,” pointing out that he is conscious of ensuring that the facility is used efficiently.

Accelerating applications and access

When Narrm Autohaus was weighing up its options, Sam assessed a range of lending solutions. The decision to go with the Business Overdraft was also to save time. Sam says that instead of applying for a business loan each time, the overdraft provides the option “to use it or not, and the access is amazing.”

Sam adds that the process to set up the overdraft was also simple and quick. Sam said the CommBank Business Lending team “made the process very easy and took care of everything even as I was working remotely and overseas at the time.”

For Naarm Autohaus, this is just one step the business is taking on the road to growth. Sam has also already mapped out the next step. “My vision is to take the business to a level where we are an independent, privately owned mini dealership where it's a one-stop shop for our customers,” Sam says. “Having access to liquidity and stronger cash flow as we strive towards this goal will help us realise it.”