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Stories Tagged ‘Invoice Finance’

Invoice Discounting Services

They are the invoice finance arm of Skipton Building Society and provide a full range of recourse invoice finance solutions. If you require a non recourse invoice finance facility they can source an appropriate credit insurance policy from a third party provider.

We have dealt with Skipton Invoice Finance on several occasions and they can do an excellent job with their traditional approach to invoice finance. When I say traditional I am referring to their credit policy which relies heavily on the quality of the debt and the quality of the people within the business. They accept that some businesses have financial difficulties and as such fall foul of the banks criteria for invoice discounting. Their approach is a flexible one and their product offerings can meet the needs of a client but also mitigate any risks that are associated with a deal.

It would be fair to say that Skipton Invoice Finance are not for everyone and they will be the first to admit this. However, in some situations they can offer what other lenders don’t. Their communication style is also direct which means clients know exactly where they stand.

Bibby Financial Services offer factoring, invoice discounting and trade finance solutions to businesses.

They ae the largest independent invoice finance provider in the UK with regional offices across the UK from Hastings to Edinburgh.

I have had a lot of dealings with Bibby and while their service levels can vary from office to office I feel that overall Bibby are a creative and solutions oriented lender.

Bibby are sometime criticised for their additional charges but in fairness to them I find their pricing to be competitive within the market and typically they price related to the risk taken which is fair. Bibby Factors will also come up with solutions that other providers of invoice finance often won’t.

If you would like to contact Bibby Financial Services or find which lender is best suited to your needs then please contact Smart Factoring Quotes on 0845 863 0738.

Invoice Factoring – Maximise Prepayment

We have discussed several times on this blog that headline rates from invoice factoring companies can be misleading. If we put pricing to one side we can look at how you can maximise the amount of cash that your facility will generate.

Debtor Limits – some lender will assess each individual limit while others will only check debtors over 10% of the ledger. It is important you can get funding against your debtors. If you can’t the prepayment level is a red herring.

Minimise Dilution – the higher the number of credit notes you issue the lower the prepayment a lender will offer you. It is therefore important to concentrate on the quality of administration, pick & packing, etc.. to ensure credit notes are kept to a minimum.

Additional Security – lenders may look to increase your prepayment level if you can offer additional security. This could take the form of a personal guarantee, a charge on some unencumbered machinery or a charge against a property. It is really a show of confidence from you as a business owner and offers the lender additional comfort.

Change in Facility – if you have an invoice discounting facility you may get a better prepayment level if you move to a disclosed facility such as invoice factoring. It gives the lender more comfort and as such they may be willing to increase their exposure by increasing prepayment levels.

If you have been declined for an invoice finance facility what can you do? Well I guess to provide an accurate and short answer I would need to understand why a facility had been declined however we can look at some general advice:

  • If it is because you operate in a particular sector such as construction it is worth looking for a specialised lender.
  • If it is because your business is too large or too small for the lender you approached use the market place and look for an alternative that actively targets businesses of your size.
  • if it is because of adverse credit history of the business or the directors look at alternative lenders but it is wise to be totally upfront and honest. Explain what happened, why it happened and why it won’t happen again.
  • if it is because of financial performance look at other lenders. Not all lenders are concerned with financial performance.
  • If you have looked for invoice discounting but have been declined perhaps you would qualify for another type of facility such as CHOC’s or factoring.
  • You could always consider asking for a reduced prepayment level.
  • Consider asking a lender to cap your facility to limit their risk.
  • Can you offer additional security to show the lender you have confidence in the business?

It is important to remember that all lenders have different criteria so it is worth shopping around. Smart Factoring Quotes would be happy to undertake a market review and advise you of your options.

Invoice discounting v Overdraft facility

This is a question that I am often asked and unfortunately it is a purely academic question for most businesses. Due to certain test cases relating to floating charges banks are no longer comfortable to lend on overdraft where the major asset within a business is the debtor book. On that basis invoice finance is typically the only option available to a business.

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Invoice Finance is the generic terms that describes both the industry and the product that provide finance against invoices that a business raises to other businesses.

Under the umbrella of invoice finance there are various products including:

Invoice Discounting – this is where a finance company will provide finance against the invoices raised by a business but the responsibility of collecting the debts in remains with the business itself. This type of facility can be either disclosed or confidential.

Factoring – this is where an invoice finance company purchases the debt from a business and not only provides finance but also provides the credit control function – i.e. they chase the debts. Disclosed factoring is by far the most common form of finance however confidential factoring can be sourced.

CHOCS – this stands for ‘clients handles own collections’ and operates in the same way as a factoring facility. However, the  factoring company allows the client to do their own credit control.

Beyond this there can be recourse and non-recourse facilities for all these types of facilities.

When choosing your facility it is important to consider what you require from the facility and then it is worth speaking with an invoice finance broker to see what facilities will best meet your needs. It is important to remember that each lender has it’s own criteria and capabilities.

Ultimate Finance the AIM listed independent provider of invoice finance have developed new capabilities. They have added asset finance and trade finance to their portfolio of products.

The asset finance will allow Ultimate to help clients who are looking for additional finance against plant and machinery and other movable and durable assets.

Trade finance will benefit importers who can benefit from both the protection and cashflow advantages a letter of credit offers.

I am not sure that either products will be available as a stand alone product but suspect they will be offered in conjunction with their core invoice finance offering. It will alow them to raise more finance in some instances than their competitors and this can benefit clients.

It is always good to see lenders developing new capabilities as it enhances the market.

As a lender Ultimate have grown rapidly in recent years and their financial performance has improved recently – their share price have mirrored this. Despite a high turnover of sales staff they do seem to have stability in terms of their operations staff. In terms of client feedback it is generally good although I have encountered regional variances. These regional variances are being addressed from what I can see.

I will be interested to see how these new products are delivered both in terms of pricing and service levels and at the same time wish them luck.

I recently met Philip Padgham on a corporate day with a firm of accountants. Various people were singing his praises and a contact of mine asked if I would try using his invoice finance company Partnership Finance.

I had a chat with Phil who explained that as a finance company they were fast moving and decisive. They also claim to offer an excellent level of service. Yes, I had heard it all before but as it happened I had a client who had been let down at the last minute by Absolute Finance. (Strangly Absolute Finance had taken 2 months to decline a deal based on information they had been aware of on day 1.)

Anyway, I presented the opportunity to Phil and he visited them the very next day which was a friday. They then surveyed the deal on the Monday and approved the deal by credit committee on the Wednesday. The client is delighted. I am impressed. From first visit, through to survey and then on to formal approval by credit committee in 4 working days is fantastic.

A big ‘thumbs up’ for Phil Padgham and his colleagues at Partnership Finance.