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 firstname.lastname@example.org.