Commercial Finance

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Buisness Club 2017

Cashflow Finance

The ability for a company to continue to trade with its clients is governed wholly by the cash availability within its own business. This is known as a company’s Cashflow. Many businesses in the UK fail in the UK every year not through a lack of profit but through the lack of funds to pay staff, suppliers, delivery agents and bank borrowings. This problem is usually created in the main through the slow payment of debts accrued by the company’s clients. Once the money starts to run out the existing creditors (Banks, Mortgage Company and Suppliers) will take action to recover their outstanding monies.

We are involved with many clients who see this situation arising but do not know how to resolve the problem. Through the use of carefully selected funding partners the business can release capital immediately and safeguard the future cashflow of the business whilst the company improves it trading position and expands its order book.

Invoice Discounting

The principle of this service is the same as for factoring – funding is secured against the individual sales invoices of the business. However, with this scheme your company is responsible for the whole of the debt collection process.

The funder provides a stream of funds based on the value of invoices raised. As the business sales grow, so does the availability of funds, without the need to apply for an increase in the limit as with a normal overdraft facility. In most instances the facility is confidential and your clients have no knowledge of the involvement of a banking institution. We can also provide a comprehensive credit insurance policy to cover your sales invoices against bad debt situations.

This service is particularly suited to established companies who not have their own credit controller or who employ the services of an external credit collection team to keep control of the sales ledger payments.

Company Restructure

At some stage in a company’s trading there will be a time when the financial strength of the business is compromised. At this point many businesses decide to take remedial action to correct overstaffing, Cashflow shortages or other financial restructuring measures.

We are experienced in helping businesses look at their whole asset base and utilising these assets restructure the finances to release valuable capital and provide significant “headroom” in their operating finances to provide a healthy Cashflow going forward. In many cases this can be carried out seamlessly without the need to change banks and without alerting customers to internal changes.

Case Study

The client had a normal turnover of £4 Million but had suffered from declining sales and needed to take corrective action to keep the bank from recalling the existing borrowings. The business had not only seen a decline in sales in the previous trading period but had also written off two substantial bad debts. This had resulted in a financial loss for the company for the first time in its history.

We appraised the existing asset of the business and provided a substantial uplift in the company’s cash availability. By introducing a confidential invoice discounting package the bank overdraft of £150,000 and a term loan of £125,000 (secured against the business premises) were fully repaid. The client also had a further £250,000 of available funds created which was used to upgrade existing manufacturing equipment and invest in a sales and marketing programme to capture new clients.

By using this financial product the company not only had a facility that would expand with their future growth and was not “repayable on demand” as with their previous overdraft.

Please contact our Commercial Finance team on 01482 213215 for assistance.  

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