February 13, 2019
Invoice Finance is an increasingly popular form of funding for SME’s. Latest figures for Q3 2018, reveal that Invoice Finance and Asset Based Lending grew by 2% and continues 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 they don’t think its suitable for their situation. We pose some of the more challenging questions the team at Pulse Cashflow get asked by prospective clients and their financial advisors to our Sales Director, Brit Pearce to answer:
Q: What size of business are you able to fund?
A: We fund businesses from start-up – where
Q: How much funding do you make available to clients?
A: 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.
Q: Do you insist on personal guarantees?
A: 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
Q: What if the current funding relationship has broken down or the business is suffering creditor pressure?
A: 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
Q: What if you can’t obtain credit limits on the debtors?
A: If the debtors do not appear creditworthy, this may well be where the
Q: The business is exposed to only a few debtors and concentrations can occur. Can you fund these debtors?
A: We look at this on the strength of the debtor, the paper trail involved and the security available. We may also look at selective debtor facilities.
Q: What's the next stage after you receive supporting credit limits?
A: If the debtors appear supportive
Q: What happens if the business is seasonal or has unusual circumstances?
A: 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
Q: The business’s ability to collect cash when due
A: 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
Q: What unexpected fees might a client incur?
A: We believe in transparency, so we charge a single fixed fee for our solutions ensuring you know what to expect. That fee will be fixed as a percentage of annual turnover. This fee is fixed for the duration of the facility, typically 12 months or our client can secure this funding and the fixed rate for up to three years, providing peace of mind from base rate changes as well as helping the business to budget accurately. So, no surprises!