- 29 Jan
Credit To Pay For Raw Materials
Persuading suppliers to provide you with a sufficiently large enough trade credit to allow you to source all the raw materials that you need can be difficult. We have come across situations where manufacturers end up having to phone around suppliers in order to purchase the supplies that they need. This is why many manufacturing companies turn to invoice funding as a solution.
Credit To Buy Raw Materials
If you are unable to get enough credit to purchase sufficient raw materials it goes without saying that production can be affected, impacting revenue. We frequently assist customers that have received, and need funding against a large one-off order, that will test their current working capital resources. In such instances, they sometimes need to purchase additional material and supplies in order to deliver on a large order. This can lead to a manufacturer knocking up against the credit limits on their trade credit accounts. Many suppliers will operated stop processes, whereby they place customers "on stop" until they settle all or part of their credit account.
Alternative Sources Of Credit
If you are unable to get the trade credit you need, there are alternative sources of credit available. A business loan could be an option, however the term of a loan may go beyond the time for which you are likely to need the additional credit. You may not wish to be repaying a loan over months or years, to cover a temporary blip in you working capital requirements.
Trade Finance & Invoice Funding
Two other options are trade finance and invoice funding.
With trade finance you receive a period of credit between making payment to your suppliers, and having to repay the credit. In some cases these types of facilities can be repaid via invoice funding facilities that extend the period of credit even further i.e. using funding against your sales invoices to repay your trade finance.
Invoice funding may also be a standalone option. You do not have to become tied into an ongoing arrangement with a funding company. You can opt for a selective facility whereby you submit one or more invoices, for advance funding (called a prepayment). That additional cash could get you over the working capital spike caused by a large order. Many of these facilities are very flexible, such that you could dip into the funding again, at a later date, if you needed it again. In this way, you could use your outstanding sales to finance your temporary requirement for trade credit. The funding could be used to make a cash purchase, or to pay down existing trade credit accounts.
- 11 Apr
Reverse factoring (sometimes called Supply Chain Finance) is a financial facility that a large company can arrange with a financier, providing a factoring service to some or all of their suppliers. It turns the whole factoring model upside down. Instead of individual suppliers having their own facilities, the substantial debtor puts in place an umbrella arrangement that benefits all (or some) of...
- 11 Jan
Sales Ledger Finance Versus Factoring
Sales ledger finance and factoring are two types of receivables finance (also sometimes called invoice finance), whereby the core service provided is that a prepayment is given against outstanding accounts receivable, that are owed to a business.Whilst this funding is nearly always part of a factoring service, there are some "service only" facilities that provide only the credit control without...
- 09 Jan
Alternatives To Funding Your Business With Your Own Personal Funds
When you run your own business you often end up putting in your own money, using your personal funds to keep the business going. It's the easiest of the sources of business funding, as you don't have to apply (if you already have the money) and business owners often have a "self sufficient" attitude that they don't want to turn to external sources of finance.The dangers of using your personal...
- 11 Dec
Business Cash In Time For Christmas
It's still not too late to get business finance in place in time for Christmas (just!) - but if you delay much longer the opportunity will have passed, until next year.APPLY NOWI posted the other day about how the Christmas period puts additional cash flow pressures on businesses, what with having to pay staff early, bonuses and a slow down in customer payments.Maybe you have been putting off...
- 18 Aug
Who Can Use Invoice Finance?
This is a reminder of who can meet the acceptance criteria to use invoice finance. There is a form of receivables funding to suit just about every type of business.Pretty much any industry sector has a form of receivables finance available. There are certain sectors that commonly use these products, the latest UK Finance (the industry body for receivables finance) statistics to the end of Q1 2018...
- 14 Aug
Receivables discounting, sometimes called accounts receivable discounting (or A/R Discounting), is a business financing facility whereby the debts that your customers own you are sold to funder at less than the full face value i.e. at a discount.FIND OUT THE COST OF RECEIVABLES DISCOUNTINGReceivables means the monies that you are owed by customers. These can be invoices for goods or services that...
- 19 Jul
Invoice Finance Despite Sale Or Return Terms
Normally finding invoice finance when a large customer trades on "sale or return" terms (SOR) would be impossible. However, we have just completed such a deal for one of our clients.Sale or return means that the customer receives your product and they can return it if they are unable to sell it. If they can sell it they pay for it. Invoices are often raise before the outcome of their sales...
- 29 Jun
Examples Of Invoice Finance Funding Lines We Have Arranged
Looking back over the invoice finance funding lines that we have arranged for clients over the last few months, the size of the funding lines put in place ranges quite dramatically.The invoice finance funding lines we have facilitated ranged from just £8K up to £1m, and all points in between. Quite a few have been around the £150K to £200K mark and there have been a few larger lines e.g....
- 21 May
Accounts Receivable Funding
The frustration of looking at a large sales ledger of unpaid invoices for sales, whilst having an empty bank account, can be debilitating. Not to mention the problems it causes in paying your creditors, suppliers and staff.When you first make a large sale, the feeling is exhilaration at having closed a deal. However, there can often be significant delays between making a sale, delivering the...
- 20 Apr
Transportation Factoring Companies
Transportation and distribution are key sectors for the use of factoring services. Many companies within those sectors use this form of funding, in order to unlock cash to improve their cash flow.Transport companies accounted for 6.6% of all clients of members of the ABFA (now UK Finance) as at the end of December 2017. Distribution companies accounted for 23.5% of client numbers, at the same...
- 05 Apr
5 Things To Check When Completing Your VAT Return
As it is coming to the end of the VAT quarter again, I thought I would make a list of the five things that I check regarding each VAT return. The list is not intended to be comprehensive, and we are not providing any accounting advice, rather this is a list of the items that I check.If like us your accountant produces your VAT return, you will still need to check that the figures are...
- 01 Apr
Leveraging Target Company Assets To Raise Money For An Acquisition
We have continued to work with a number of parties who are looking to make acquisitions by leveraging the assets of the target company that they are acquiring. This is a way to raise part or all of the purchase price to pay for the business that is being acquired.This methodology of raising acquisition finance is not widely known, but it can be an excellent way of facilitating the acquisition of...
- 28 Mar
Funding For A Car Crash Repairer Within 3 Days
This is a great example of how quickly a car crash repair company can get funding against their invoices.We were contacted at 4:30pm by a car crash repair company that had an invoice for £4,000 that they wanted to receive funding against. The way that this type of car repairer finance works is that they receive 100% of that invoice value, less a fee for the transaction.The actual enquiry was...