Equipment finance case study: how an earthmoving business turned fleet equity into working capital

A profitable business could still be cash-flow constrained.

“Maddox Earthworks” is the composite name used for a six-year-old regional Victorian civil and earthmoving business. The scenario describes a team of seven delivering drainage, road-shoulder, subdivision and small civil packages across western Melbourne, Melton, Bacchus Marsh and Ballarat.

Annual turnover was about $2.8 million. The issue was not simply whether the business was profitable on paper. Council and contractor claims were paid after work and approval, while wages, fuel, dry hire and materials had to be funded before that cash arrived.

The first job was to map value, payout and usable equity asset by asset.

The original facilities had been arranged at different times through different providers. Before considering a refinance, the scenario brought the fleet into one view: estimated market value, existing payout and gross equity.

Important distinction: gross equity is not automatically cash available to borrow. A lender may use different valuations, advance rates, age limits, useful-life assumptions and security controls. A formal payout and valuation still need to be confirmed.

Two awarded council jobs created a working-capital requirement before progress claims arrived.

The two projects had a combined contract value of about $1.9 million. They overlapped and required dedicated people, hired machinery, fuel, materials and small plant. The source scenario estimated that the business needed enough liquidity to cover the early delivery period rather than waiting for approved claims to replenish cash.

The refinance consolidated five assets into two purpose-matched facilities.

The source scenario used loan-style equipment finance rather than assuming one product name was automatically suitable. The structure separated the excavators from the work vehicles because the useful lives, replacement cycles and terms were different.

The working-capital release came from the difference between the new facilities and old payouts.

The new facilities represented about 82.6% of the illustrative fleet value. That percentage is arithmetic—not a statement of current lender policy or an amount another business can expect to receive.

The regular monthly commitment fell, but the balloons still had to be planned.

The lower regular repayment did not make the finance free or remove risk. The two final balloons totalled about $105,750. The benefit was a different cash-flow shape: more liquidity during project delivery and a known end obligation that had to be incorporated into the asset-replacement plan.

The cash was ring-fenced against identified project costs.

The scenario did not treat the $136,000 as general spending money. It allocated the release to the early project-delivery gap.

That discipline matters. Official Australian business guidance recommends forecasting money in and out, planning for recurring obligations and comparing the costs and risks of funding options rather than focusing only on the amount available.

Asset equity alone was not enough to make the strategy sensible.

The PPSR can help identify registered security interests in vehicles, machinery and equipment, but it is not an ownership register. Ownership, payout control, sale documents and settlement instructions still need to align.

The composite outcome shows the intended purpose—not a guaranteed result.

In the supplied scenario, both council projects were completed, the business added project credentials and the overdraft balance reduced rather than becoming the default funding tool for every shortfall. Equipment repayments were predictable and the balloons were included in a forward replacement plan.

Those outcomes depended on delivery, margin control, claim approval, weather, safety, customer payment and many other business factors outside the finance contract. The case study therefore illustrates a possible use of equipment refinancing; it does not establish that refinancing creates growth or that another business will receive the same terms.

Start with the transaction, then compare the finance.

1. List every core asset: make, model, year, hours or kilometres, condition and location.
2. Request current payout letters for every facility that may be refinanced.
3. Separate market value, forced-sale assumptions and actual usable equity.
4. Prepare the awarded contracts or pipeline evidence and the timing of progress claims.
5. Build a monthly cash-flow forecast covering wages, super, fuel, hire, materials, tax and existing debt.
6. Model the proposed term, repayment, fees and balloon using the actual quote.
7. Confirm PPSR, ownership, seller, insurance and settlement requirements.
8. Review GST, depreciation and accounting treatment with the business’s accountant.

What comes from the supplied case study—and what was independently checked.

The business, contracts, fleet, facility and outcome figures come from the supplied composite case-study source. The rebuild corrected the fleet-equity arithmetic from approximately $240,000 to $241,000 and independently reconciled the remaining flow-of-funds totals.

• business.gov.au — Guide to managing cash flow
• business.gov.au — Set up a cash flow statement
• PPSR — Protecting your business assets
• ATO — Depreciation and capital expenses
• ASIC — National Credit Code

Rebuilt and reviewed: 26 August 2026.