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Single Debtor Factoring

Single Debtor Factoring can be hard to obtain – especially with any meaningful prepayment level.

There are only a number of invoice finance lenders who will consider a proposal where a client has only one customer. This number reduces dramatically as the required finance limit increases.

There is an argument that lenders should be willing to provide funding against a good quality single debtor such as Tesco and as stated some lenders are more than happy to do so. It does however increase the risk profile and typically they will need the debt credit insured. A major concern relates to disputes – the debtors willingness to pay rather than their ability to pay.

Lenders will often call this type of proposal 100% concentration

Smart factoring Quotes recently received an inquiry from a client looking for finance of £800,000 against a single debtor.

We were able to do a quick review of the market and establish which lenders were able to help. We received a lot of interest in the proposal but most lenders were unable to assist over a level of £500,000.

The proposal was very urgent for a number of reasons and we were able to agree terms with a lender quite quickly which were acceptable to the prospect. We were able to collate the required information quickly and get the facility set up in the timescales required by the prospect.

If you are looking for a invoice finance facility and you only have one customer please get in touch  with Smart Factoring Quotes today.

Factoring in Northern Ireland is an important form of finance for the area. However, which invoice factoring companies can assist in Northern Ireland?

We are fortunate to have an excellent client base in Northern Ireland and through recommendation have managed to support clients with good advice as to which lenders can best meet their needs.

I personally believe more invoice finance companies should show a willingness to do business here. There is an excellent market of businesses, the legal system is obviously the same as in England and the region is easily accessible by cheap flights from the UK. The geography certainly shouldn’t be used as a barrier to do business.

If you have a business in Northern Ireland and you are looking for an invoice finance facility get in touch with Smart Factoring Quotes today.

Tax issues are becoming more and more common. Certainly among my invoice factoring clients I have seen a recent rise in clients with HMRC arrears and no repayment plans in place.

12-18 months ago HMRC seemed more than happy to support SME’s during the credit crunch. HMRC were to many businesses the lender of last resort. However, there seems to have been a change in their attitude and when negotiating a repayment plan they are being aggressive and unfortunately in many instances unrealistic.

One of my invoice finance clients had been hit with a bad debt for £150,000. Although the business was and is profitable they racked up arrears on VAT and PAYE of £100,000. They survived the bad debt and were able to maintain their current HMRC liabilities once out of the rut but the arrears remained. In negotiating a repayment plan HMRC wanted full repayment within 9 months. Our client is in the haulage business and oprates on small margins – this repayment plan was simply impossible.

That said our client was happy to agree this because he had enough money to make the first payment and would worry about the balance later. HMRC had given him the alternative of a 9 month repayment plan or the would wind them up. Of course he wanted to accept the offer.

A lot of these people have never had arrears before and as such are inexperienced with dealing with HMRC. In talking to a business associate who specialises in negotiating with HMRC he believes businesses should stand their ground and demonstrate what is achievable. He has managed to negotiate time to pay agreements over 5 years but accepts the average is about 3 years.

Permanent Recruitment Factoring has often been challenging to source relative to sourcing a factoring facility for temporary recruitment.

While temporary recruitment has an excellent audit trail by way of an agreed payment schedule, a purchase order and signed timesheets permanent recruitment is dogged by onerous terms and conditions which can reneder an invoice worthless if the candidate leaves withing a given period. As such the perceived security of any lender is reduced dramatically.

Permanent recruitment was for many years considered worthy of a 50% prepayment at best and this is still the case with many lenders. In fact some lenders will not look at a recruitment company where the permanent recruitment accounts for 30% of turnover.

I am glad to say that this is not the case with all lenders.

Several permanent recruitment businesses have approached us recently looking for new facilities or looking to improve on existing invoice factoring facilities.

Smart Factoring Quotes have managed to achieve a 70% prepayment level on both invoice factoring facilities and invoice discounting facilities.

There are clearly some invoice factoring companies out there who have taken the time to analyse the risk of a candidate leaving their new job. I guess it can happen but will every client leave? Highly unlikely and as such a 70% prepayment seems acceptable – to lender and client alike.

Invoice Finance Brokers should in theory provide advice that is both independent and impartial. In my day to day work as a broker that is my aim with a view to offering advice as to what is best for my client.

There a a lot of excellent brokers in the market place all of who will act in the best interests of clients – and so they should I hear you say.

However, there are a few things that may surprise people looking at using an invoice finance broker.

One of the largest providers of advice about cashflow finance in the UK is actually owned by Bibby Financial Services. On that basis which lender do you feel they recommend more than any other? That is only an assumption on my behalf but you have to question their independence.

A broker that claims to be the largest online broker of invoice finance facilities was recently looking for introductions FROM lenders of clients they wanted to ‘manage away’. This is normal practice but in return they were offering them a new client. ‘Very nice’ you may say but what if it is your business that is passed to that lender simply to be used as a pawn. Why did the broker recommend a certain lender to you? Not because they were the best lender for you but because the broker involved owed the lender concerned a favour!! That is no way to conduct business.

Another major invoice finance broker offers services to the invoice finance lenders such as audit and survey services, collect out services, etc.. Lenders who are kind to them in terms of work will typically receive clients in return.

It could of course be argued that brokers place business to lenders where they have the strongest relationships – certainly if you are owned by a lender the relationship is fairly strong!!

The point is that any business using a lender should ask how independent and impartial they are. As with anything if you go in with your eyes and ears open and ask the right questions you will be ok.

It should also be said that these brokers did not reach the size they are without being successful and that success was built on good advice I have no doubt. The question could be raised as to whether they have kept control over that quality advice or not… but that is another topic..

If you are looking for a indicative quote for invoice factoring you can simply go online and visit Smart Factoring Quotes. The site not only offers bespoke indicative quotes for invoice factoring and invoice discounting, it’s aim is to be an online resource for business owners. The site offers business owners who currently use invoice factoring advice on how to minimise costs and also on what other facilities may be available to them.

For a business that is new to invoice finance it offers advice on negotiating a new facility, case studies, details of the different types of facilities and it also offers a phone number where they can speak to a member of the team. The team have decades of experience within the industry but importantly also have experience of running SME’s in the ‘real world’. As such the Smart Factoring team can have encountered most scenarios before.

The option of online ‘self help’ allows business owners to develop knowledge of the invoice finance market and it’s products with a view to helping them negotiate their own facilities. They can also check the offers they receive from lenders via the online quotation system. Alternatively they can pick up the phone and access the team directly.

Looking at the site there are an impressive list of testimonials from business owners and accountants which is comforting.

If you are looking for an invoice finance facility why not visit Smart factoring Quotes today.

Recently I have seen quite a few confidential invoice discounting clients looking for flat service fees. The most recent being a recruitment business with a turnover of £56m. I asked why the flat fee was attractive and was told it “impacted less on margins.” Who am I to argue with someone who has a built up such a large recruitment business and has been a user of invoice discounting for over a decade. I did however feel that it warranted a comment on the forum.

So what are the benefits of a flat monthly fee? Well I guess it is easier to budget and potentially cheaper for a company with a rising turnover but in reality the costs should not differ dramatically to a percentage based fee. The way the flat fee or percentage based fee is calculated will be the same for any lender anyway. Most lenders will arrive at a monetary service fee and then convert it to a percentage of gross turnover anyway.

There is obviously a requirement for flat fees though as one of the ‘new kids on the block’ Gener8 Finance use this as their USP.

Personally I can’t see the advantages but I guess it provides certainty and in times such as these something has to be said for that.

I would however welcome anyones thoughts on this……

We have often been approached by businesses that work in the IT sector who raise invoices in advance for maintenance contracts or in stages for large projects.

Unfortunately lenders have always been wary of funding such businesses as it was felt that invoices would not be paid by customers in the event of business failure.

We are happy to announce that we have access to a new product targeting the IT sector.

Whatever your function within the IT sector, if you are looking for finance get in touch with Smart Factoring today.