Invoice Finance Brochure (PDF) - Business banking - HSBC

Invoice Finance

Trading with otherbusinesses on credit terms?Our services can help to speed up your cash flow, collect paymenton your invoices and protect you from the risk of bad debts.Achieving and maintaining an effective andflexible cash flow is essential to the successof your business – particularly if you sell ontrade credit terms.But, all too often you can find yourself facinga long wait for payment – an unwelcomepressure on your cash flow – whilechasing payment wastes valuable time andresources that could be more profitablyemployed elsewhere. And, despite yourbest efforts, there is always the risk that aninvoice you’ve spent time and effort chasingmight become a bad debt.Our invoice finance services can help youfund, manage and protect your invoices,unlocking the power of your sales ledger andfreeing up valuable time and resources.Our Finance Service offers a flexible sourceof working capital driven directly by yourtrade credit invoices – the more sales youmake, the more cash is available to you.It’s a responsive, cost-effective alternativeto a bank overdraft or loan.Our Sales Ledger Management Service canhelp with the stressful, time-consumingjob of collecting and processing customerpayments. We provide a professionalcredit controller and a planned, consistentcollection routine, collecting in anappropriate, professional way that supportsgood customer relations and can save youa great deal of time and stress. And, if yousometimes feel concerned about potentialbad debt risks, our Credit Protection Servicecan help safeguard your cash flow and profits.We recognise that you want to work, theway you want to work. So, in addition toyour key Invoice Finance contacts, weprovide you with your own unique usernameand password. This means that, whereveryou connect to our Internet Invoice Financesystem, you can connect to us. You can dojust about everything necessary online andwe link with all popular accounting packagesto make your life even easier.Whichever combination of services youchoose, they’re backed by our ServiceGuarantee for as long as you choose towork with us.2

ContentsHow we can help 4Helping you sell safely 6The right solution foryour business 8Commonly askedquestions 10What to do next 113

How we can helpOur services can help meet a varietyof business needs.For instance:■ Your sales are growing and you need toknow that your cash flow will keep pace.■■■■■■■You have a lot of money tied up in the salesledger that should be working for you.You are funding a major purchase orplanning a management buy-out/buy-inand want the sales ledger to fund yourworking capital needs.You are moving into trade credit sales forthe first time and want to control customercredit without a big increase in workload.As your customer base has grown, so hasthe amount of time and resource neededto chase payment, and you now want tolook at cost-efficient alternatives.You are looking for a flexible, cost-effectivealternative to trade credit insurance.You want to break into an export marketand would like the collections, currencyledger and payment protection taken careof for you.You are already exporting, but wouldlike the convenience and competitiveadvantage of offering open account terms.How does it work?Your CustomerYour Business4 5HSBC Invoice Finance1 2 3 51 You provide the goods/services toyour customer and invoice them.2 You send the invoice details to us.3 We make available up to 90% ofthe value by the next working day.4 Either your own credit controlleror, if you use our Sales LedgerManagement Service, the controllerwe’ve assigned to you, carries outthe collections procedure.5 When your customer pays, we makeavailable the balance due to you.4

Finance ServiceWaiting to get paid puts a strain on your cashflow. Our Finance Service can help you toovercome this. When we receive details ofan eligible invoice from you – either onlineor by post – we can make available up to90% of its value to you, the next workingday following receipt.■■■■■■■■Turns today’s sales invoices intotomorrow’s cash flow by unlocking thepotential of your sales ledger.No more waiting up to 60 days forpayment – your cash flow benefits almostimmediately.Assured cash flow – you enjoy access,the next working day, to up to 90% of thevalue of your eligible invoices.The balance becomes available when yourcustomer pays us.A flexible source of working capital thatgrows in line with your sales performance.Cost-effective – you only pay for the fundsyou draw down into your bank account.Suitable for most businesses that have aturnover of £250,000 or more and sell inthe UK or overseas on trade credit termsand invoice on completion, after supplyingproducts or services.Available as a ‘stand-alone’ service forlarger and longer-established businesses,or in combination with our Sales LedgerManagement and/or Credit ProtectionServices.Sales Ledger Management ServiceRunning an effective credit controlfunction demands staff time and businessresources, both of which could be moreprofitably employed. Which is why somany businesses are now choosing theconvenience and cost-effectiveness ofoutsourcing their collections through us.Our Sales Ledger Management Servicehelps by providing a professional andexperienced team to chase and process yourinvoice payments. You simply send out yourinvoices as usual, simultaneously notifyingus either online, using your accountingpackage, or by post. Our team then collectsyour payments and you can track theprogress online.Frees more of your time and resources forother areas of the business.We won’t undermine hard-won customerrelationships, but we will work to supportthose relationships, while helping to ensurethat you are paid promptly.We agree payment targets with you at theoutset and make sure that you can track ourperformance online.Payments are processed and postedto your account by the next working dayfollowing receipt.We make it easy for your customers to pay– either by BACS from their bank, by postinga cheque or over the telephone by debit /credit card.Select just this service, or use it incombination with either/or Finance andCredit Protection.5

Helping you sell safelyCredit Protection ServiceThis is a flexible and cost-effectivealternative to trade credit insurance.It means that if a credit protected invoiceis 120 days overdue for payment, or yourcustomer becomes insolvent, we will payyou any net outstanding balance of the debt.There is no lengthy validation procedurebefore payment is made.■■■■■■Any legal fees incurred in collectinga credit protected invoice will becovered by us dependent on the levelof protection you have selected.Individual credit protection limits areprovided for each of your customers.Limits are quickly and easily requested,set up and viewed online.We can agree with you a realistic‘first loss’ figure that keeps your costsdown, while protecting you from thebigger risks.You know that your sales are protectedabove the agreed first loss, up to thecredit protection limit for that customer.Equally effective for both UK andinternational sales.May only be used in combination withour Finance and/or Credit ManagementServices.Services for exportersIf you are already exporting or plan tostart exporting to any of the major worldmarkets, our services can offer someimportant advantages. They work ina similar way as they do for UK sales,providing combinations of finance, efficientcollections, transmission and processing ofcustomer payments and – very importantly –protection from bad debts.■■■■■Our service lets you offer attractive ‘openaccount’ terms to overseas customers,so you can compete with ‘local’ supplierson an equal footing.We look for the most appropriate creditcontrol expertise to overcome obstaclessuch as different time zones, languages,currencies, cultures and customs.Individual credit protection limitsare provided online for each of yourcustomers to help you to trade withadditional confidence, while protectingyour cash flow.We also have UK-based credit controllerswho are fluent in the major Europeanlanguages.You decide which currency you wantto use and we’ll run the ledger for you.6

Internet Invoice FinanceWe understand how important it is foryou to be in control of your finances.Our Internet Invoice Finance service isan easy to access and navigate systemthat allows you to see what is goingon and run your facility.This means that you can use theinternet to:■ arrange the transfer of fundsto your bank account■ notify us of sales invoices■ see up to date sales ledgerinformation■ manage credit limits for yourcustomers■ obtain reports and much more.All this is available in a secureenvironment that is available 24/ 7(except for periods of maintenance).What about the costs?The costs for our invoice finance servicesfall into two categories – a charge for thefinance drawn from the facility and a chargefor the services we provide.Finance charge – compares with that fora traditional bank overdraft – typically 2% to5% above base rate – for funds you transferto your bank account. As your customerspay the invoices due and the sum we haveprepaid reduces, so the charge falls. We payyou an allowance for any credit balances onyour account.Service charge – the charge usually fallsbetween 0.2% and 4.3% of the value ofyour invoices and is charged each time younotify us of an invoice. The percentage alsoreflects the workload generated by yoursales ledger and any agreed ‘First loss’ orcredit protection limits. The Credit ProtectionService element of our service charge istypically between 0.3% - 1.0%.Arrangement fee – There is a variableone-off fee on set up of the facility.Our charges are quoted in advance inwriting, and typically apply for 12 months.Our invoice finance facility with you willlast also for a minimum of 12 months, afterwhich just three months’ notice is requiredto terminate.7

The right solutionfor your businessWhy HSBC?Not all Invoice Finance providersare the same■■■We are one of the UK’s largest providersof International invoice finance andfactoring services, helping our clientssell around the world.Unlike some of our competitors,we have no hidden or additionaloperational charges.Service quality is at the core of whatwe do and we measure this quarterlyby surveying our clients.What are the benefits?While we keep our costs competitive,it’s also worth remembering that thereare considerable savings for businessesusing our services:■■■An improved cash flow can help youto buy more competitively from yourown suppliers by obtaining earlypayment discounts.Assured supplies of stock/raw materialsmean that you can provide a better serviceto your customers.Typically, a business operating on tradecredit terms might expect to write off thevalue of 1% of turnover as the result ofbad debts – that’s £10,000 on a turnoverof £1,000,000.■■■Our clients can expect to reduce theirreliance on borrowing facilities.Businesses that have a flexible sourceof working capital can respond morequickly to market opportunities.You can avoid the hidden costsassociated with providing extendedcredit for your customers.Working with youYour key contact point is your client serviceteam of specialists. They are responsiblefor understanding the way your businessoperates and providing the support andinformation you need.Our Service GuaranteeIf you are unsatisfied with our service,please let us know and give us the chanceto put things right. We will try and resolvethe issue as soon as possible, and we willrefund our service charge for the period ittakes for us resolve your complaint.What about the alternatives?If your business is not in a position tobenefit from invoice finance, we havea number of alternative services that mayfit the bill. These include overdrafts anda range of loan schemes. Please letus know if we can direct you to otherbusiness services from the HSBC Group.8

Are we rightfor your business?Our services could be appropriate for youif you can answer ‘yes’ to the following:• Does your business have an annualturnover in excess of £250,000?• Do you sell directly to your customersrather than acting as an agent?• Do you sell to several customers ontrade credit terms (14, 30 or 60 daysfrom date of invoice)?• Do you invoice on completion ofsupply of the product or service andavoid stage or part invoicing?• Do you have low levels of customerreturns or disputed invoices (typicallyunder 5%)?9

Commonly asked questionsIsn’t this kind of financeusually expensive?We provide more than finance. Somebusinesses do not use our Finance Serviceat all and come to us for Sales LedgerManagement and Credit Protection. Theservices we provide represent good valueif they meet your needs. Which is whyyou’ll receive a written offer before beingasked to decide. If we do not believe yourbusiness will benefit from our services,we will tell you so.What personal guaranteeswill you require?Our ‘security’ is based on the sales thatyou identify to us as being genuine andcollectable. We will usually ask yourdirectors to provide a limited guarantee,but we will not typically ask for anysupporting security (property, for example).Won’t I lose some control overmy business if I have to checkwith you before I make a sale?We value every single customer. Makingit more difficult for you to deal with yourcustomers is in neither your nor our bestinterests. By providing flexible cash flow,saving you the time you spend chasingpayment, controlling the risks of nonpaymentand providing online information,we try to give you more control, not less.10

What to do nextIf you would like to know more about howour services could help your business,please contact your Commercial Manageror branch to set up a meeting with oneof our invoice finance specialists.Call our information teamdirect on 0800 34 34 35They will be pleased to arrange a costindication to meet your needs, or to answerany general questions you may have on therange of services.Visit www.hsbc.co.uk/businessWithin the Finance and borrowing sectionyou can:• view a demo of Internet Invoice Finance• obtain a Price Indication• request a call back• read more about our award-winningservices and global expertise.What we will do nextWe will arrange for your local invoice financespecialist to contact you in order to assesswhether or not our services could offer youreal benefits. In doing so, the objective is toensure that our services really do meet yourneeds and fit in with the way you operate.For us this is fundamental to understandingyour business.HSBC Invoice Finance (UK) LtdFarncombe RoadWorthingWest SussexBN11 2BWFreephone: 0800 34 34 35Tel: 01903 205181Fax: 01903 214101Email: info@invoicefinance.hsbc.co.ukImportant notesHSBC Invoice Finance credit facilitiesare subject to status.Lines are open 9am to 5pm Mondayto Friday, excluding public holidays.11

www.hsbc.co.uk/businessIssued by HSBC Invoice Finance21 Farncombe Road, Worthing, West Sussex, BN11 2BW94451-7 MCP37367 01/11. ©HSBC Bank plc 2011. All Rights Reserved. AC7623