The Situation: From Profitability to Pressure
A well-established car parts business with yards in both the North and South Islands had built its reputation by sourcing wrecks, low-cost vehicles, and OEM parts for resale. For years, the model was profitable. But like many in the automotive and panel-beating sector, the company was hit hard during COVID.
When revenues declined, their bank reduced further lending. To stay afloat, the company was forced into expensive short-term financing. As conditions improved and profitability began to return, management expected cheaper funding would be available. Instead, their bank continued to decline. A second bank also said no, citing their previous poor years.
The Turning Point: An Advisor Who Knew Another Option
Not ready to stall growth, the directors sought advice from another banker. While unable to provide finance directly, this banker had worked with Lock Finance before and suggested they explore invoice finance.
The referral was timely. Like many in the car parts and panel-beating industries, the business belonged to a large buying group that guaranteed payments between members. While this reduced bad debt risk, it did nothing to improve short-term cash flow. What the company needed was access to the value tied up in receivables—capital that could be released and put to work.
The Solution: Invoice Finance Aligned to the Automotive Sector
Lock Finance provided an Invoice Finance Facility that released up to 80% of the company’s unpaid invoices. The impact was immediate:
The Outcome: Breathing Room and Growth Capacity
With the facility in place, the car parts business was able to trade with confidence. Instead of constantly reacting to client payments, management could plan ahead with certainty. Cash flow became proactive, allowing them to manage supplier obligations on time while building a buffer for unexpected delays.
The business also gained the capacity to serve more of the market, particularly fast-moving lines where margins were strongest. By removing expensive short-term debt and the bank overdraft, profitability improved even after taking into account the cost of invoice finance. Working with a growth-focused partner rather than a traditional bank meant the facility was aligned with opportunity rather than collateral, helping the firm reinvest and expand without putting personal assets at risk.
“Lock Finance gave us more than a facility—they gave us back control. We could clear old debt, release our property from the bank, and invest in stock where the demand was strongest.”
— Managing Director
The Lesson: Turning Receivables into Growth
The automotive and panel-beating industries are capital-hungry but often overlooked by traditional banks, especially when profits have fluctuated. Invoice finance for car parts businesses provides a practical alternative, turning unpaid invoices into working capital that supports debt reduction, stock growth, and financial independence.
