Debt factoring and invoice discounting is a method of raising finance secured
against an invoice as soon as it has been raised instead of having to wait for the customer to pay. An invoice factoring
facility (or invoice discounting as it is known) could substantially improve your cashflow by releasing payment - often within
24 hours of the invoice being raised and the goods despatched.
The facility, which can be highly flexible, is ideal for a start-up business or in Turnarounds
or businesses experiencing rapid growth when cashflow is critical. It is simple to arrange and can be highly cost-effective
with added benefits in respect of credit control.
We will require the minimum amount of information to get you started on the process and funds
could be available within 2 weeks.
Costs are based on the amount of money drawn down and a small annual fee to cover the costs of
servicing the facility.
The key advantage is flexibility. The amount you can borrow grows with your business and,
for many companies, it is a viable alternative to a limited overdraft.
To give an example of what can be achieved through a factoring loan/invoice discounting loan
facility, here are two examples which give an idea of costs against the facility. Terms will be tailored to your individual
circumstances and the amount required. In general, the contract term will be a minimum of 12 - 24 months continuing
thereafter as required.
Case 1
Manufacturing Company with a turnover of £3,000,000 requested a facility of £400,000 secured
on invoices through a confidential invoice discounting facility charged at 2.25% over base rate pro rata on monthly balance
outstanding and an annual service charge of just 0.6% on gross turnover.
Case 2
Service Company with a turnover of £1,000,000 requested a facility of £100,000 secured on invoices
at 2% over base rate pro rata on balance outstanding with an annual service charge of 1% on gross turnover.
Invoices when raised are copied to the finance company who will then generally pay up to 80%
of value within 24 hours - with the balance paid less charges when the client settles the account.
It is possible at any time to review the facility as the business grows to allow increased limits.
