Invoice Finance

When You Should Compare The Market For Invoice Finance Deals | Invoice Finance Reading | Help with Invoice Finance
Why you should ‘compare the market’ for invoice finance deals as you would your energy or car insurance 800 533 Invoice Finance Connect

Why you should ‘compare the market’ for invoice finance deals as you would your energy or car insurance

Money experts are always advising us to consider switching insurance, mobile phone, broadband and energy providers to be sure of getting the very best deal possible for our circumstances.

But if your business is one of the circa 50,000 in the UK using invoice finance, it may not have occurred to you that the same principle applies to your existing funding deal, especially if yours has been in place for a long time.

Take the example of a company which, 10 years ago, made use of an invoice finance facility on an annual turnover of £1m and were borrowing around £150,000. The cumulative annual fees were in the region of £15k per annum.

Ten years on and the company’s annual turnover has grown to £8m, and its approximate borrowing is £1.2m.  Based on the original fee parameters set, the business would now be paying £135k per annum, an increase of £120k! If the business hasn’t reassessed or reviewed the finance arrangement it originally had in place, the fee rate they’re now getting may still well be in line with the deal originally offered, but, given the higher numbers involved, it could certainly be improved.

Another point to bear in mind, looking at our example, is that, 10 years ago, our company would not have been able to provide a proven track record of trading, and probably wouldn’t have had a strong balance sheet. So the invoice finance provider would have insisted on personal guarantees from the business’s owners. However, a decade later with a trading track record to show, a period of sustained profitability and a lower risk profile, such guarantees would no longer be necessary.

Other potential benefits of reviewing your facility

Of course, once your finance is in place, it can be tempting simply to leave things as they are. But, actually, there are many sound reasons for regularly reviewing your provider:

  • To make sure you’re not paying too much for your finance
  • To ensure that you are benefitting from the maximum available cash possible, especially if you need more borrowing to drive growth
  • To be sure you are getting the best possible service from your lender, especially if you’ve been experiencing issues
  • Your business may have simply outgrown your current provider, or changed direction in a way it can no longer support

If you think any of these applies to your own organisation, it could well be time to join forces with a new invoice finance partner.

How we can help

At Invoice Finance Connect, we have many years’ experience in this specialist area of business funding. We work by regularly reviewing the fees and security our clients have in place. If you don’t have a broker like us involved in your arrangements, it’s highly unlikely that your existing lender will ever come back to you and offer to review your current deal and reduce what you’re paying.

Talk to us whether you are new to the concept of invoice finance or have been using it for a while. We’ll make sure your business is connected to the lender that’s absolutely right for you now. What’s more, we’ll keep reviewing things to make sure that remains the case, and suggest changes when appropriate.

Get in touch with us today to talk through how we can help you.

Streamlined Invoicing Processes | Extended Payment Terms | Business Cashflow | Business Invoice Help Thames Valley
Are extended payment terms placing stress on your company cashflow? 800 533 Invoice Finance Connect

Are extended payment terms placing stress on your company cashflow?

For smaller businesses it is always worth investing effort in streamlined invoicing processes which help stabilise cash-flow and minimise payment delays.

Invoice terms define how a business likes to be paid, and often encompass information such as acceptable forms of payment and any late penalties. The due date is perhaps the most crucial point of all.

While 30 days has traditionally been the standard, deadlines for payment are something you need to discuss with any client before starting work, and they vary considerably from one industry or sector to another. Large retailers, for example, can insist on extended terms beyond a month to 45, 60 or even 90 days.

Without firm agreements in place, cashflow headaches can result from any payment terms longer than 30 days, particularly when you need to pay suppliers, staff wages, VAT and PAYE before receiving any money in yourself.

If you run a shop and receive immediate cash, that’s one thing. But if customers pay after you’ve provided them with a service or goods, bear in mind that effectively you’re offering them credit, and you may need to bridge the gap in some way.

Debtor days, which can be calculated in several ways, is a measure of how quickly a business gets paid and shows the average number of days taken for a business to collect payments from clients. It can reveal a lot about the state of the business; a longer number of debtor days may mean that cash is in short supply with obvious consequences resulting.

Countering the impact of slow payers

Clearly there is a lot businesses can do, from invoicing promptly to using efficient billing software to chase unpaid invoices effectively and making invoices and payment terms clear. However, especially in the current climate, delayed payments can always happen.

You could consider a loan or overdraft. But invoice finance could well prove a far more effective way to fund and grow your business. In a nutshell, invoice finance provides funding of up to 90% of the gross sales invoice, typically within 24 hours of the invoice being raised.

The remaining 10% of the balance is paid once the end client has settled the invoice in full.

The cost for this service is either based on a percentage of the value of the original invoice, and between 70 and 80% of providers charge in this way. Alternatively, it’s charged as a flat monthly fee. It often depends on the particular situation or the preference of the parties involved. You also pay a finance charge on the money that is borrowed and of course the longer that invoices remain unpaid then the higher the interest/finance costs for the business.

To benefit from a service like this you need to be providing goods or services business-to-business and raising invoices in arrears after these have been delivered.

How we can help

We can help your business long and short-term as the current crisis continues, allowing you to resolve any immediate cashflow issues. With many years’ experience to our name, we offer various finance solutions, and can even better any existing arrangement you already have with an invoice discounter.

Get in touch and we can discuss some options before connecting you with the finance provider we think is the best match for your individual needs.

Covid-19 & Its Toll On Recruitment Industry Finances | Invoice Finance for Recruitment | Invoice Finance Newbury | Recruitment Finance Newbury
Covid-19 & Its Toll On Recruitment Industry Finances 800 533 Invoice Finance Connect

Covid-19 & Its Toll On Recruitment Industry Finances

Clearly, businesses everywhere have experienced disruption from the coronavirus. But the impact on the recruitment industry has been particularly significant. After all, it’s a people-focused business, not one intended to be conducted at a 2m distance.

It’s a sector that had seen steady growth over the last five years, with the market valued at nearly £39bn last year, as the UK enjoyed low unemployment. But recent figures have shown the sharpest decline in the industry since the 2008 crash, as unemployment is expected to rise this quarter to levels not seen since 1983 and claims for Universal Credit have soared 910%.

Many organisations have had to downsize, close completely, lay off staff, reduce employees’ hours, or are using the government’s Job Retention Scheme (furloughing). In many cases, start dates for new hires have been delayed. Organisations including travel operator TUI have understandably frozen recruitment completely.

So while a 2019-2021 growth prediction of 3 to 6% for the industry was made in recent months, the picture now looks very different.

Tough on agencies

Agencies in particular risk a lengthy wait before employers start to outsource the recruiting process again. This can bring particular financial difficulties. Not least the drop in income but also, as activity returns, cash flow issues as an agency may have to pay a placed employee’s wages at the end of a working week, but not be reimbursed until the end of the month by the client.

Additionally, agencies need to be aware of organisations such as GRI, which operate between agencies and end clients and impose strict trading terms on outsourced recruitment solutions, which in turn can have an impact on their ability to secure funding. GRI can be a huge issue for those agencies that utilise Invoice Finance for their working capital as many lenders have challenges due to the nature of the contracts and also securing bad debt protection where GRI feature.

A survey of 300 industry professionals conducted in April by performance marketing specialists Talent Nexus and others found that more than half (55%) of agencies had either made or were considering redundancies, while only 9% of in-house recruiters had already cut jobs.

There were similar discrepancies when it came to issues including reduced working hours, salary cuts and furloughed staff.

Recruitment in numbers

Between February and March 2020, according to the Covid-19 REC jobs outlook survey, employer confidence plummeted by more than 20 percentage points, although short-term demand for temps rose by 15 percentage points.

Of course, the outlook isn’t universally bleak. While retail, leisure and hospitality work all but ground to a halt overnight, with 46% of staff in those areas expected to be furloughed, demand for staff in supermarkets, pharmaceutical, medical professions, food production, cleaning and delivery soared.

Some areas of fintech and tech are also currently highly sought-after, as are those in delivery, logistics and company restructuring, alongside anyone supporting and enabling home schooling or remote working.

What about the longer term?

Of course, no one knows for sure how or when this crisis will end. But a swift return to a working life that’s exactly the same as it was pre-Covid seems a remote possibility. Some form of change is likely to be with us for the long haul, possibly permanently. Recruiters, like everyone else are having to adapt.

That could mean greater (and better) use of recruitment technology, more online interviews, more home-based working, more temporary contracts and smaller hiring budgets.

At the same time, however, the UK’s recruitment sector is strong and resilient, so it stands an excellent chance of making an effective comeback.

How we can help

At Invoice Finance Connect, we can help your recruitment business in the short and long term, so that you continue to thrive throughout this crisis and ride out any immediate financial issues, while also being poised to return to maximum capacity as soon as possible.

This also includes assisting those agencies where GRI feature as a customer, each lender will have their own approach, however there are Invoice Financiers out there that will fund this debtor and of course we use our experience to match the financial needs of the agency with the right funding partner.

We have many years’ experience working with recruiters, and offer numerous different solutions from invoice discounting, factoring to bad debt protection. We can even help you improve any deal you may already have in place with an invoice finance provider. Whatever your particular needs or situation, get in touch today to learn how we could help – we’ll discuss your options for adapting to these challenging times.

The Essentials of Moving Providers | Invoice Finance | Finding New Invoice Finance
The Essentials of Moving Providers 800 533 Invoice Finance Connect

The Essentials of Moving Providers

Historically business’ have worried about the ease with which they can transfer providers, whether it be utilities, banking or invoice finance. They put off investigating other options, despite not being happy with the level of service they are receiving, simply because they are worried about how much disruption it will cause their business.

We all know that in today’s business environment, it is more vital than ever that the day to day running of the business is efficient and hassle free.

Did you know:

  • Invoice finance is used by over 40,000 businesses across the UK, covering numerous sectors and including organisations of all sizes.
  • Invoice finance is a simple and effective way to free up cash.
  • Setting up invoice finance is straightforward and hassle free.
  • Switching providers, if you are not happy with charges or level of customer service, can be quick and hassle free.
  • When switching providers, your new lender will help you out with the administration, contacting your customers (where applicable) to provide them with the new payment details and ensuring the process is effortless.

Switching providers couldn’t be simpler. With a reputation for our straightforward approach, Invoice Finance Connect help and ensure that implementation is quick, efficient and we pride ourselves on being able to provide a seamless transition from any existing arrangements.

So why not contact us on 01635 283089 to see how easy it is to switch to Invoice Finance Connect.

Murray McIntosh – Client Case Study 800 533 Invoice Finance Connect

Murray McIntosh – Client Case Study

Client: Murray McIntosh
Contact: Adam Cave
Position: Managing Director

Their Need:

Our client is a recruitment business that has been trading since 2014 and during this time they have successfully established themselves in a number of sectors such as Engineering, Financial, Cards, Payments/Transactions, Policy, Public Affairs & Communications. Initially, the company started out offering permanent placement to these industries, however very quickly also offered temporary placements to their customer base.

Given the nature of temporary recruitment and the working capital requirement it dictates, the business has needed to utilise Invoice Finance. This has provided them with the cashflow it needed while allowing the business to grow without any constraints.

Why Invoice Finance Connect:

“Invoice Finance has always worked well for us, it has met our cashflow obligations and provided us with the necessary funding to help us achieve our growth. We started using this type of funding from the early part of 2015 and did not have any issues until the latter part of 2016 when we suffered a bad debt of £200k. Naturally, the bad debt was not our lenders fault, however their handling of the issue and the impact it had on our cashflow was far from satisfactory.

When we advised our lender of the bad debt, they immediately reduced our funding and offered us nothing to soften the blow. Luckily for us, part of the debt was covered by credit insurance, plus our historical profitable trading had meant that we were not utilising our Invoice Finance facility that much, consequently we were able to take the hit of the bad debt and the impact of the action of our then funding partner.

My lenders actions and attitude towards me really did make me question my relationship with them. We knew Dan Bowsher as he helped us set up our Invoice Finance arrangement back in 2015 and after looking him up on LinkedIn we could see that he had set up his own independent brokerage. We met with Dan and explained our dissatisfaction with our current provider, he clearly understood the issues we had gone through and accepted the remit to find us a new provider that could offer the expected levels of customer service.

Dan came back to us with a number of options, from which we chose a new lender whose entire ethos was built on delivering a customer centric proposition. Our new client manager was running a portfolio of 25-30 clients, compared to 45-50 with others, the actual administration of the facility was going to be way less labour intensive than what we had previously and not only that it was going to cost us less too, so we were extremely happy with the new lender than Dan had introduced us to.

We have been with this lender for over a year now and I am pleased to say that we have a really good relationship with them and they have delivered excellent levels of service at all times.”

Ongoing Support:

“We got in touch with Dan again recently, as we have a ventured into a new sector. We needed some additional funding to help us recruit a new team of people to focus on this area and launch a new division. Dan has introduced us to a loan provider that has given us the capital injection we needed to make this work.

We have a really good relationship with Dan, he listens to us and understands our needs, always responding with solutions that cater for our requirements. I would strongly recommend that anyone that is either using or thinking of using Invoice finance to get in touch with IFC, you will not be disappointed”.

Click here to download a copy of this Case Study.

 

Restrictions Within Invoice Finance Facilities 800 533 Invoice Finance Connect

Restrictions Within Invoice Finance Facilities

When we are approached by a business that is already using Invoice Finance, it is usually due to the fact that the facility is being restricted by their existing lender. Not only does this hinder the cashflow requirements for the company but it can affect the growth aspirations.

These restrictions are typically as follows:

  • Overall Facility limit
  • A concentration or funding limit against a specific customer
  • The overall advance limit is too low or has been reduced
  • Level of overseas debt that the existing lender is prepared to fund

If any of the issues highlighted above feature on your Invoice Finance facility and they cannot be resolved then you need to seriously consider moving to a new lender.

There are so many different providers of Invoice Finance and each lender has their own unique credit policy or approach to how they do business. What might be an issue for 1 lender and is reason for a restriction to be placed, might not be for another.

Invoice Finance Connect was approached by a recruitment business during the early part of 2017, who were being restricted on their overall facility limit. The lender at the time would not increase the facility limit as the financial performance had declined in the previous year compared to prior years.

There was however a reason for this, which could all be explained along with producing forecasts, which showed that the business would bounce back well during the current year. Unfortunately, the existing lender would not change their stance and would not increase the overall funding limit. Consequently, Invoice Finance Connect introduced them to a new lender who understood what had happened historically and demonstrated the faith in the management team by giving them the facility limit that they needed, which met the cashflow requirements of the business moving forward.

This business has been with their new lender for nearly a year now and both parties are extremely happy and the business has gone from strength to strength.

If any of the issues highlighted are a feature of your current facility then please do get in touch with us. They can have a huge impact on cashflow and of course we use our knowledge and experience to help you find a lender who will work with you to ensure you are getting the full benefits from your facility.

Contact us for more information on 01635 283089 or email us at info@invoicefinanceconnect.co.uk.








    Please Note: Under General Data Protection Regulation (GDPR) Invoice Finance Connect must state that the information you submit via our contact form will only be used to respond to your enquiry and subsequent enquiries you may have with us. Please be assured that you will not be added to any marketing mailing lists. Our Privacy Notice is available here.