Ensuring cash flow certainty has helped a savvy Queensland subcontracting company take on major construction projects and navigate fast growth.
Five years ago, Barry Egan and his fellow business partners had a hunch that a market gap existed for an agile civil construction company that could help major construction clients finish projects safely, on budget and on schedule. They were right.
ROBAR CIVIL, based in Brisbane and serving clients around Australia, is on track to hit revenue of about $15 million for the 2019-20 financial year, up from just $150,000 when they started in 2014-15. Led by Barry, his brother Ronan and Artur Krupinski, the business draws on the three civil engineers’ previous experience with elite construction companies.
They have carved out a strong subcontracting niche managing concrete form, reinforcement and pour (works, labour and plant hire, stormwater and drainage projects, and earthworks and excavation jobs. “The three of us felt we could improve subcontracting processes and reduce inefficiencies for the major construction companies,” Barry says. “That was our plan and it’s paid dividends.”
Cashflow to fund growth
A turning point for ROBAR CIVIL came when it teamed up with ScotPac in October 2017 to ensure it had sufficient cashflow to take on new work and drive growth. “Until partnering with ScotPac, our struggle wasn’t winning work, it was purely about being able to fund it in the short-term,” Barry says.
When discussions first started with ScotPac, ROBAR CIVIL’s revenue figures were much lower but they had big plans. Drawing on 30 years of advising SMEs, ScotPac could see the business had growth potential because of its technical expertise, strong invoices and a growing blue-chip client list (that now includes industry giants such as John Holland, Laing O’Rourke and Fulton Hogan).
ROBAR CIVIL now uses ScotPac Selective Invoice Finance with a facility limit of $750,000 and typically makes monthly claims of $500,000 to $700,000. Barry says there is no way his business could have accepted some of its bigger projects – such as a grade separation project in Victoria requiring rail shutdowns – without a trusted finance partner. “It was a $3 million job. We would have needed about $1.5 million to fund the job if we didn’t have Invoice Finance. It physically couldn’t have gone ahead.”
Barry likes the flexibility of Selective Invoice Finance, which allows his business to submit only the invoice or invoices they need to be paid at any given time. ROBAR CIVIL often has to quickly outlay hundreds of thousands of dollars a month to keep projects running, despite working with clients who have payment terms of 30 to 45 days. “To manage cashflow, we pick and choose the invoices we want to factor,” he says. “It gives me the comfort that I can take on a job that’s going to need cash to get it up and running while knowing I have funding in the background.”
The ScotPac partnership has been instrumental to ROBAR CIVIL’s success, Barry says. “If we were relying on profits alone it wouldn’t have been possible for us to grow at the speed we’ve grown.”
With more than 50 employees on its books, ROBAR CIVIL prides itself on deploying management and engineering teams quickly to jobs such as Flinders Link Project to extend the existing Tonsley rail line in Adelaide and the replacement of a bridge over the Clyde River at Batemans Bay in NSW.
Barry says the company’s agility and project-management skills have won over clients, along with a focus on relationships. Its partnership with ScotPac is highly valued, too. Barry welcomes the fact that ScotPac accepts business assets and invoices – not personal properties – as security. “Unlike the banks, ScotPac didn’t just look at us in terms of the physical cash we had. They were more interested in the works that we are doing and the potential of the works.”
The other advantage of the ScotPac alliance is the financial rigour that monthly reporting brings to ROBAR CIVIL. “For me, the relationship with ScotPac has been a big help to the company’s operations overall.”
Best yet to come
With the business having realised its true value and potential thanks to its owners introducing forward thinking and flexible financing, the future looks positive for ROBAR CIVIL. The next move will be to reduce the emphasis on subcontracting work to take on more projects working directly for clients.
Barry, Ronan and Artur have done the hard yards to turn their idea into a profitable dream, knowing also that their mateship is intact despite the combined stresses of building a business and meeting the demands of hard-marking clients. Barry quips, “It’s been a lot of work, but we’re still on talking terms!”