Invoice Finance / Factoring

The Client:

The client is a Freight Forwarder business and has traded as a Limited Company for the past 7 years, with a healthy turnover of circa £600,000 per annum.

The Scenario:

The client has had consistent cash flow issues due to their providing standard payment terms of 60 days to their customers for invoices, in addition to experiencing occasional late payments. Conversely the operating costs of the business, being predominantly wages, needed to be paid either weekly or monthly, therefore presenting an overall cashflow issue.

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The Solution:

The client was initially presented with several Business Loan options we managed to secure for them, although they ideally wanted a greater degree of flexibility in their borrowing. We therefore searched the whole market for an Invoice Finance facility for them as this was deemed the most suitable solution for their needs.

We managed to secure a £100,000 Invoice Finance Facility which will enable them to be paid advances on their outstanding invoices up to the facility limit over the coming year. The facility works with the lender deducting a set percentage as their fee, once the invoice has been paid by the client’s customers.
This solution and Invoice Finance Facility will greatly aid the client’s cashflow when they need it most and it won’t be restricted by any rigid monthly repayment terms.

Summary:

Invoice Finance / Factoring is designed to increase a company’s cashflow and fund growth. It is a relatively quick method for accessing business finance against a company’s account receivables.
Whilst personal and business credit may prevent access to Business Loans in some cases, Invoice Factoring Lenders are more focussed on the ability of a business’s clients payment history.
The facilities put in place are invariably Unsecured options which don’t require security over and above the invoices themselves, whilst also removing the time-consuming headache of chasing payments, since these now become the responsibility of the lending partner.