I am often amazed at how much disbursements cost factoring clients over and above the ‘headline’ charges. It is not uncommon for some clients to be paying more in disbursement charges than they do in service fee and discounting fee combined.
I was with a client yesterday where this was the case. When I spoke to them about the fees they were very upset about the ‘games’ the factoring company concerned were playing.
Read Full ArticleTrade finance is a great product for importers of goods to the UK. When combined with an invoice factoring facility trade finance can help to finance the whole trade cycle. This means finance can be provided right the way from the confirmed order from your customer right the way through to your customer settling the invoice.
Read Full ArticleCashflow Finance is currently under construction as a resource to help businesses who are looking for cash flow finance solutions.
The site will be aimed at businesses who are seeking advice about their cash flow finance options.
Read Full ArticleSmart factoring quotes have a new and improved website.
The site has been restructured to ensure that navigation is now easier and a bespoke quotation can be started and obtained from any page.
Read Full ArticleWe often get asked to recommend the best invoice finance company. I thought I would look at what makes a good invoice finance company.
In part it is a case of horses for courses. Some lenders are well suited to small businesses while others are better suited to larger businesses. The same goes for different sectors, different geographic locations and different scenarios.
Common complaints with lenders surround poor service levels. I must admit in some cases it is simply because the lender has said no to a client. Sometimes this is justified and in other instances it just seems like a lazy answer rather than doing some work to solve a problem.
Some lenders genuinely pride themselves on top quality service levels and customer satisfaction. This however can be a double edged sword as the same lenders can be described as expensive in comparison to lenders who cut corners and provide a poor service.
Communication is a key factor. As an invoice finance broker I can fully appreciate this. It seems like the most basic concept in any business relationship but I am often left amazed at how many lenders simply fail to return calls or e-mails both with myself and clients.
They say that service is inseparable from the people that provide it. This means that staff within invoice finance companies need to be engaged and happy. This comes as a result of fair remuneration, good training, clear goals and a good environment to work in. Some lenders clearly provide this while I know that others simply don’t. It may be a bit of a generalisation but the lenders that treat their staff properly also seem to be the 0ones that treat their clients properly.
Confidential invoice discounting is the ideal invoice finance product for businesses that want to do their own credit control and do not want their customers to know that invoices are being funded. Confidential invoice discounting provides businesses with working capital and will prepay up to 90% of the gross invoice value.
Confidential invoice discounting can however be very hard to come by due to the criteria invoice finance companies put in place.
Lenders look beyond the basic invoice finance criteria of selling to other businesses on credit terms and invoicing in arrears of delivery. Lenders will look more carefully at a businesses financial performance and they expect a robust balance sheet. Equally important are the processes that a business employs to collect in outstanding invoices.
Recruitment Finance is a new site that has been launched by the Cash Flow Solutions group.
While it is still under development it will provide an in depth guide on what facilities are available for recruitment companies.
Recruitment companies typically access recruitment finance to allow them to pay wages of their temps. This can take the form of a simple invoice discounting facility, a factoring facility with the added benefit of a credit control service or a full back office solution that provides a full back office service.
For many businesses invoices discounting provides the cash that is needed to ensure that their business can survive. Without the necessary cash they cannot pay employees or suppliers. Customer payment patterns can be erratic and can cause cash flow issues and headaches.
Invoice discounting is typically the cheaper of the invoice finance facilities available to businesses. It can also be confidential meaning your customers are unaware of any lenders involvement.
In terms of qualifying for invoice discounting it really rests on processes rather than financial performance. Don’t get me wrong financial performance is important but without the right processes in place you will not qualify for invoice discounting no matter how profitable you may be.
There are 2 main process that will be looked at. Your invoicing process will be interogated. It is important that a good audit trail exists and that invoices are raised in arrears of delivery.
Your credit control process or procedure is also important to demonstrate that debts are collected methodically and professionally rather than not at all or on an ad hoc basis when you have time.
If your invoicing process is not right it is unlikely any type of invoice finance facility will be made available. If your credit control procedures are not adequate it is likely a factoring facility would be offered rather than an invoice discounting facility.
