How to alleviate the constant gap between waiting for customers to pay before your business can fulfil new orders
The solution….invoice finance
- Invoice finance is the ability to provide cash flow for the business against current invoices owed to the company
- Invoice finance would allow your business to access cash early from outstanding invoices
- Receive up to 90% of the value of the invoice within 24 hours of completing the work
- Use the cashflow to pay suppliers early, to obtain a discount
- Invest the funds in new equipment or staff to enable the business to continue to grow
- Specific facilities available for the Construction sector
The invoice finance market is currently worth over 3bn* and is ranked highest amongst alternative finance solutions. Some businesses are waiting more than 90 days to be paid. With an invoice finance facility the business has a continued supply of working capital.
*www.invoice-funding.co.uk
A client scenario – Invoice Finance:
Overview:
MFS was approached by an electrical and refurbishment contractors business which had only recently begun trading. In the first instance the business was only working for one debtor (a nationwide retail outlet). The nature of the work they provided meant that the business had to purchase all materials and employ several different trades to enable them to complete a job. The work could take 1 to 4 weeks. They could only invoice the business when the work was complete and then had to wait 30 days for payment.
Business Need:
The business needed to purchase materials, pay weekly wages and all suppliers on time, all while waiting for the debtor to pay them. The business had no funding in place as it was a new trading business, and the directors has used their own money to fund the initial work for the customer.
Invoice Finance Solution:
Invoice Finance was the ideal solution for the business. MFS was able to introduce the business to a lender who didn’t mind that the directors had only just begun trading, as they had vast experience in the sector. This lender had no objection to a one customer ledger and was happy not to restrict the business with concentration limits. The business was able to gain an injection from the current outstanding invoices and then going forward had the comfort of knowing that it was able to obtain regular working capital to run the business on a daily basis.
This company has now been trading over a year and has gone from strength to strength, obtaining further customers which it added to the invoice finance facility.
If you’d like to find out how we can help you and your business, simply get in touch with us today – paula@metisfunding.co.uk
Published: September 5
Tags: finance, invoice finance, Small Business