When seeking to raise finance against ‘working assets’ in a business, the ‘debts’ owed to or by the business derived from invoices raised to customers (the ‘sales ledger’), and from suppliers (the ‘purchase ledger’), can be a valuable cash-flow tool in accelerating cash income, and retaining capital respectively within your business. This page aims to headline those products which help to accelerate cash income.
The Invoice Finance 'family' commonly adds value where;
- Under cash-flow pressure
- Struggling to pay suppliers on time
- Unfavourable payment terms enforced by 'key' customers
- Seeking additional working capital funding
- Planning an MBO
- Acquiring other businesses
- Considering outsourcing its credit control or payroll functions
- Already factoring/invoice discounting and want a competitive alternative
- Enables working capital to grow in line with sales
- Provides financial headroom giving greater financial flexibility
- Can provide funding independently of core banking thus maintaining bank credit facilities
- Security rests in your sales invoices. Often used as an alternative to overdrafts or loans which usually require additional background security, that is not always available
- Reduces risks and administrative burdens
- Credit checks available to minimise trading risk and gives peace of mind
- Because customer invoices are generally considered by lenders to be a viable means of security on ‘stand-alone’ basis, ongoing funding may also be acquired within an ‘Asset Based Lending’ package complimented by 'Asset Finance' and 'Trade Finance'
- These ‘working capital’ facilities are available in a variety of options and can often be ‘tailored’ to meet the circumstances and needs of a specific business
Confidential Invoice Discounting
- Up to 90% of the invoice value can be made available within 24 hours of an invoice being raised. The remaining balance is made available when customers settle their outstanding invoices.
- This facility is provided confidentially. The client retains their own credit control so customers remain unaware of the financing arrangements. The business should have good financial controls and a strong financial background.
- Transaction funding such as mergers, acquisitions, MBO’s and MBI’s may well need additional headroom over and above invoice discounting funding. This can also be provided through an asset backed finance facility by releasing funds against other assets, such as plant and machinery, land and buildings.
- Invoice Discounting solutions tend to be tailored to specific needs for more mature businesses with proven track record.
- Disclosed to trade customers with up to 90% advance released within 24 hours against outstanding trade debtor invoices.
- The factoring company will monitor and chase the debt.
- Especially suited to growing businesses and new-starts.
- Flexible credit management is built into the agreement with statements and reminder notices issued to reduce the administrative burden on the business. Assistance with telephone credit control can be provided if required.
- Credit vetting is available to assist in decisions about extending credit to an existing customer or taking on a brand new customer. This helps prevent bad debts before they occur.
- Releases businesses from the hassle of sending statements and reminder notices.
Call 01508 494 345 or email us
Selective Invoice Finance
Selective Invoice Finance (also often called 'Single Invoice Finance' or 'Spot Factoring') is ideal for businesses requiring a quick and simple short-term working capital solution.
These flexible products can be selective by customer, invoice, contract, or period, and are especially suited to businesses which don't want to enter a long-term contractual finance commitment, perhaps need to bridge the initial cash-flow gap between outlay and income on new contracts, or which operate in a 'seasonal' market.
- No minimum period contract, no minimum monthly or annual fees, no notice period or termination fee.
- No contractual commitment. The facility can be used once or as and when required.
- Funding against a single invoice, or multiple invoices where agreed payment terms are between 30 to 120 days.
- Up to 85% of the value of the invoice can be advanced within in 24 hours.
- The lender takes a fee once the debtor makes payment.
- Funding can be used to complement existing funding including overdraft.
- Funding limits typically between £10k and £300k.
Contract Finance can help a wide range of businesses in many industry sectors, from IT and marketing to automotive and security. It can also accommodate contractors and sub-contractors within the construction sector.
Unlike traditional Invoice Finance products which tend not to be able to accommodate staged ('milestone') payment invoices, Contract Finance works by advancing cash against staged invoices within a contractual billing arrangement, thus accelerating cash in-flow where ongoing supplier obligations exist over an extended period.