Funding business without taking on long term loans
The Coronavirus pandemic has had a dramatic effect on UK businesses. With lockdown, a drop-in demand and revenue, businesses found themselves in unchartered waters. The Government threw many lifelines to businesses to help support their businesses through the worst times. With many businesses having taken advantage of the Government loans on offer, to help their businesses survive, it could be that simple cashflow funding is what is now required. Many businesses have now taken advantage of all the loan and support available to them but the next few months will see the regular tax, VAT and rent commitments looming.
This is where simple cashflow funding may be required to help businesses meet these vital payments. Invoice Finance is a financial solution designed to improve cashflow and grows in line with your business.
What is invoice finance?
Invoice Finance is an increasingly popular form of funding for SME’s. If a business is looking to access a flexible form of cashflow, invoice finance is the answer. Latest figures reveal that Invoice Finance and Asset Based Lending grew by 2.5% with £22.7bn of funding provided to support over 40k UK businesses. With figures now comparable to total funds drawn on overdrafts, businesses should be considering how invoice finance can help their businesses grow.
However, despite the growth in awareness and usage, many businesses and indeed their financial advisors rule out invoice finance because in favour of traditional loans and overdrafts.
Why should I choose invoice finance?
Invoice Finance can deliver the following benefits to a business:
- Flexible funding facilities – which help a business grow by accessing up to £2m of funding to use as they choose
- Improved cashflow - up to 90% of outstanding invoice values within 24 hours
- Fast decisions - our clients deal with local decision makers ensuring they get a fast response to their queries
- Save time - our expert teams manage our clients credit control and sales ledger management leaving them free to chase new business
- Transparency - A transparent single fixed fee with no hidden costs or surprises so our clients stay in control
- Peace of mind - We carry out credit checks on customers and include debtor protection should the customer be unable to pay
What size of businesses do we fund?
We fund businesses from start-up – where first year turnover is predicted to be in excess of £300k - to £15 million. However, our largest client turned over £40 million so we are flexible dependent on the client.
How much funding is available to clients?
The level of finance we provide to a client depends on the business and its situation. The maximum amount of funding to one client is £2.5 million but we provide facilities as low as £30k-50k and everything in between.
What security is required?
Like most funders, we will always look to secure a Personal Guarantee from the major shareholder/director of the business – whether this is limited, will be subject to the facility and our considered risk of the debt. In taking the guarantee we will also want to see that the guarantor is a homeowner, this provides traceability – but the real purpose of the guarantee is to rely on the support of the Directors during any potential failure and recovery of the book debt.
Do we support businesses where their current funding relationship has broken down or the business is suffering creditor pressure?
We will look to assist turnaround situations - subject to a credible turnaround plan - manage-aways’ and instances where the current funding relationship has broken down. We treat each client individually and fairly basing our decisions on the quality of the debtor/debt. To assess this, we review the credit limits available on the clients’ debtors as this provides us with insight on the likelihood of our client being paid for services provided.
What position do we take if the businesses is exposed to a few debtors and where concentrations may exist?
We start with the strength of the debtor, the paper trail involved and the security available. We may also look at selective debtor facilities where high concentrations exist. We are flexible enough to look at businesses that are seasonal or has unusual circumstances. Our flexible approach means that we look at things on a case by case basis and will work hard to fund clients experiencing these situations. Where the business has seasonality, we will work to provide a flexible funding facility to provide the cashflow required to fund the procurement of goods upfront.
Will slow paying customers be problematic?
Our factoring solution includes credit control support functions such as debtor verification and debt collection which will help speed up the time it takes to collect invoice payment from customers resulting in a positive effect on cashflow. In addition to this we do offer a standalone fully outsourced credit control service for firms who do not require funding but could benefit from having more time to focus on productive tasks.
For a fast, transparent cashflow funding solution to help business as we work through these uncertain times contact Pulse Cashflow today on 0845 539 7003.
Leave a comment