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What Is Invoice Finance | Factoring | Invoice Discounting | Invoice Finance Advise in Berkshire | Invoice Finance Connect
What Is Invoice Finance? 800 533 Invoice Finance Connect

What Is Invoice Finance?

No matter what type of business you own or work in, there will always be companies striving to outperform you or trying to offer a more competitive edge, enticing your clients to switch suppliers. Having a competitive edge really is a necessity, especially today in an ever-changing business landscape.

Often a business is asked to operate by selling their products or their services to a customer on credit terms, where payment will be in 30, 60 and occasionally 90 days after product shipment or project completion. Whilst this is an ideal solution for your clients, it can often be detrimental to the business, having a huge impact on cashflow and having the ability to meet day-to-day costs. This is where the benefits of invoice finance really come into their own. In essence it provides you with the necessary cash that you need in your business as soon as you issue your invoices.

Key facts about invoice finance:

  • In the main Invoice finance is delivered through 2 products. The first is Factoring which is a disclosed service with the customer base being fully aware of the service. The second is Invoice Discounting, which is predominantly a confidential facility without the customer base being aware.
  • In essence, with Factoring, the Invoice Financier looks after a company’s unpaid invoices, whereas with Invoice Discounting the responsibility of the sales ledger management is retained by the business.
  • You get immediate access to cash as soon as an invoice is raised.
  • When a customer pays your invoice, you will receive the balance of the face value of the invoice, minus the lender’s fee.

Key advantages of using invoice finance are:

  • You can improve your cashflow and working capital without having to wait for your customers to pay your invoices promptly.
  • Immediate access to funds means you can run your business by paying suppliers on time, fulfilling payroll obligations, purchasing new equipment or facilitating further expansion.
  • There is no need to offer property assets as a form of security.
  • Packages can be tailored to individual business needs.
  • Often an approval process is relatively painless and quick, on occasion they can be approved within 48-hours.

Typical examples of where invoice finance is required are:

  • Recruitment companies providing temporary staff. Often employees are contracted on a weekly basis, so wages need to be paid every 7-days. However often a client agreement states payment terms of 30 days + so an Invoice Finance facility would accommodate this type of cashflow cycle.
  • Food and drink manufacturers who supply some of the leading chains of Supermarkets have to pay their suppliers on 30-60- day terms, whilst waiting up to 90-days for payment from their customers.
  • Young businesses who are going through a quick and unexpected growth period due to business success will often feel the pinch. Cashflow needs increase quickly to accommodate for the business expansion and invoice finance is often key to maintain and healthy and stable platform for success.

We regularly get asked by businesses already using invoice finance if we can assist them, this may be due to issues with their current provider or indeed that their funding has been restricted. Here at Invoice Finance Connect, we are always happy to offer impartial and independent advice to ascertain if we can assist you.

If you have a question or need some help in relation to Invoice Finance, then our team will be delighted to help. For a free consultation please call us on 01635 283089.

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.

 








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