Invoice Discounting or Factoring?
Looking at Invoice discounting or factoring to finance your debtors but need to make sure you get the right package for your business?
We will find the right package for you using our many years experience and long term relationships with a wide range of invoice discounting companies and factoring facility providers.
With Invoice Discounting or Factoring there is
the RIGHT way & the WRONG way
SIMPLE
EFFECTIVE
FLEXIBLE
If you get it right
COMPLICATED
PROBLEMATIC
DIFFICULT
If you get it wrong!
What is right and wrong is very different for each business. What is perfect for one may be a nightmare for the next.
At FIND we help you get it right for you, using our many years experience and long term relationships with a wide range of specialist banks & finance providers
"But it's so simple, I don't need any help"
Debtor Finance is undoubtedly the easiest form of finance for a trading business to raise BUT sadly not many business people understand the complexities of the Factoring and Invoice Discounting marketplace. It is a market place full of enthusiasm and sales managers driven by targets and knowing that as long as your debtors are good they can get you financed.
There are, however, a great many important elements you need to consider to ensure your debtor finance facility is the one best able to help YOUR business grow and prosper. The wrong facility could put damaging restrictions on your cash availability and have an opposite detrimental effect on your business growth.
Issues to consider with Invoice Discounting or Factoring Facilities
Factoring
Recourse or
Non Recourse?
Debtor Quality
do they like my debtors ? Contractual, proof of delivery, paperwork
Concentration Limits
A big one that often trips up actual cash drawdowns!
Interest Rate
Is it competitive & cost will be affected by debtor turn
Security
Just book debts, full debenture & affect on other lenders, priority deed
Invoice Discounting
Fully confidential or disclosed?
Payment Terms
30, 60 or 90 day
terms. What is
your debtor turn?
Online Systems
Ease of drawing down money
Debtor Collection
Included in service or still down to you?
Indemnity or Guarantee
What are you being asked to sign? Big difference between the two!
Insurance
Included or
non-covered?
Credit Limits
How are they set and how will they affect funding percentages?
Fees
Turnover based, all inclusive or added costs
Length of contract
Tied in for how long? Notice Period?
Other Costs
Payment drawdown fees, credit limit fees, CHAPS costs, arrangement fees and annual review fees
Which invoice discounting or factoring provider to choose...
"Aren't they just all the same?"
Every financial company in the Debtor Finance Marketplace has a slightly different way of operating. Most of them are better at either Factoring or Invoice Discounting but most will offer both. Some specialise in small business but pricing is always turnover driven. Others focus on a full service, saving you the staff cost of collecting debtors, whilst some prefer to leave you in control of your customers.
Some companies will consider more contractual debts and even specialise in that and even do building contracts, whereas most wont touch that under any circumstances.
Concentration limits is another area where debtor finance companies can be very different and they are absolutely key if the facility is going to work for you.
There is an array of bolt on’s that some companies can also provide with specific Stock, Trade or Asset finance. Many are also able to offer the Business Growth Scheme loans either as a short term loan or as a top up to get a higher % or cover some high concentration or credit limit issue on the debtor finance facility.
It is easy to see there is a lot more to consider than there seems. At FIND we will get the best package available for you, pairing you with providers that match your needs.
the answers and let us help
We have people who have been dealing with this type of finance and the companies offering it since the late 1980’s. We have seen many enter the market and a good many leave. When it first started it was seen as a lender of last resort when the high street bank pushed you away but it has matured over these last fifty years to become the main source of working capital finance for UK trading business’.
In that time these lenders have refined their systems and their services based on years of experience and now we have a plethora of options given the explosion of online banking services and secondary challenger banks. It has never been easier to get debtor finance but that makes it all the more important that you get the right package from the right company.