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Stories Tagged ‘declined’

We have recently assisted a company in Manchester arrange a factoring facility.

Our client is a security company with a single debtor. While paying wages weekly they were only getting paid monthly at best by their customer who was a larger security company based in Birmingham.

We used a Manchester factoring company because the requirement was urgent so they could react quickly. We knew which local lenders could assist a security company with a single debtor.

The solution was implemented quickly to the satisfaction of our client.


Invoice finance companies place huge importance on a businesses audit trail.  The audit trail ensures that the debts are secure and provable.

If you are looking for an invoice finance facility it is important to look at your business and how robust the audit trail is.

Each business will have it’s own quirks and characteristics. As such you will have to focus on finding ways to implement a suitable audit trail.

By way of examples let’s have a look at some traditional robust audit trails that invoice factoring companies expect to see in place.


  • Purchase order
  • Proof of delivery (signed by recipient)
  • Invoice

Temporary Recruitment

  • Agreed rates
  • Purchase order
  • Signed timesheet
  • Invoice

Design Agency

  • Brief supplied by customer
  • Quote
  • Acceptance
  • Work is submitted
  • Signed satisfaction note (this eliminates queries down the line)
  • Invoice raised

The better your invoice audit trail the better. Importantly you need some kind of 3rd party sign off by way of a signed proof of delivery, signed timesheet, signed satisfaction note.

This may seem like additional administration but it is key to sourcing a facility and it is a good step for your own internal procedures.

In a recent study by the Institute of Directors (IoD) is was found that 1 in 4 UK businesses have tried to access finance via their banks. Unfortunately almost 60% of those businesses had their applications rejected. What was more worrying was that 83% of those businesses has received no information regarding the available alternatives.

The banks should be offering the government’s Enterprise Finance Guarantee Scheme (EFG) whereby the government guarantee 75% of the facility thus limiting the banks exposure to 25%. There is an argument as to why the banks would lend 25% against a project or to a business that they didn’t believe in but it does at least limit their exposure. They should at least be promoting this facility but it seems to face the same issued that the SFLGS did in terms of lack of acceptance by the banks.

On that basis it is interesting to see invoice finance providers bolstering their offerings with the EFG scheme. I am not sure how active they are in lending but I have seen a fair amount of PR relating to invoice finance providers offering the EFG which is more than can be said of the banks.

But realistically what are the finance options outside the banks?

Well beyond the banks asset finance arms who offer finance against real business assets. They tend to avoid softer assets such as IT and office furniture but will happily consider plant and machinery along with vehicles. Just because you bank has said no to asset finance other options do exist.

The same can be said with invoice finance. The bank invoice finance arms are the most risk averse. As such, just because you have been told ‘no’ does not mean there is not a suitable facility out there for you. The independent invoice finance market can deal with most scenarios.

The commercial mortgage market is severely subdued and lacks alternatives outside the banks. Roughly 2 years ago a dozen or so lenders withdrew from the market literally overnight and that vacuum remains to be filled.

I think businesses need to be flexible in their approach to sourcing finance and maximise the security that sits within the business. That means seeking specialist forms of finance from specialised providers. If your bank can offer 80% against your debtors can an independent specialist invoice discounting provider offer more? The same applies to asset finance and commercial mortgages – shop around and maximise the amount of finance you can generate.

In dealing with various businesses and lenders as an invoice finance broker the biggest frustration is when a lender takes a long time to say ‘no’.

In my position as a broker I always aim to manage any clients expectations in terms of what can be reallistically achieved in the market given their particular circumstances. In dealing with any lender I try and highlight any issues upfront so that our energies can be focussed on mitigating the risks associated with those issues. My aim in doing this is to be honest and maintain a solid reputation but also to avoid any last minute issues. If a lender discovers the deal they have been looking at for the last 6 weeks is not what they thought because of some ‘skeleton in the closet’ then it will come as no suprise that they may change or retract their original offer.

The flip side of this is when a lender is provided full information on day one and the risks have clearly being highlighted to them. Yet after 2 months of visits and negotiations they say ‘no’ and the reason given is what was flagged into them in the first instance. This is frustrating for the broker such as myself but for the business concerned can be catostrophic.

In the most recent instance of this kind I had a client who had breached a facility with the invoice finance arm of a major bank. There had been a number of fairly minor breaches over a 5 month period and as such the lender had given the client 3 months notice to find an alternaitive funder. I approached an independent lender and flagged in the issues asking at the end of my email, “Given these breaches could you assist?”. The lender assured me they still had an appetite to assist and that their credit team were on board. They went to various meeting and chased the prospect for a decision until he finally accepted their terms. A full pre lend survey was done a month into this process and the feedback was that the survey had gone well. However another month further down the line and only when I phoned for an update was I told the facility had been declined. ‘Why?’, I asked. ‘The client has breached his facility with the existing provider’, was the response. In instances like that you have to laugh or you would cry. However, the implication for the client was that in less than a month the existing provider would be looking for full repayment and as such his business was at risk. The lender concerned made apologies and moved on to tell another broker how their ‘national, local and personal’ presence is best for their clients. I have to say I disagree. This has only happened to me twice this year and both times, despite having the assurances of senior people, this same lender have dropped out at the last minute after a protracted process and have declined the deal based on something they were aware of on day one. The lender concerned will not be dealing with any introductions from me going forward having shown it is not an issue with individuals or regions but a company wide problem.

I am writing this to share an experience so that clients don’t make the same mistake. So how do you ensure this doesn’t happen to you? In time critical situations like the one I have described I think it is important to run at least 2 invoice finance companies in tandem through the application process. Be totally upfront with them from the outset and highlight any risks to them. This way they can look to structure a facility that meets your needs but also mitigates their concerns over risks. The time in working with 2 lenders until you have credit backed offers will be repaid in peace of mind and in ensuring you are not back at square one should a lender decide they no longer have an appetite to assist you.