The Garage 303

FEATURE 22
Success in business is often determined by one
simple factor: the careful management of cash.
MAINTAINING
a healthy cash
flow is a challenge
faced by
businesses in
every industry, irrespective
of their turnover bracket.
One of the factors that determine
whether you can maintain
momentum is cash flow.
Your firm may regularly be
faced with struggling to meet
the demands of payroll, suppliers
and HMRC. You do not
want to receive letters from
HMRC reminding you of your
tax bill. Many businesses
fail because they fall short of
cash, even though they may
have large amounts of debt
owed to them by customers.
Your sales ledger could be a
valuable source of working
capital for your business. Invoice
finance bridges the gap
between the point at which
you make a sale, and the
time payment is received. A
finance provider releases a
pre-arranged percentage of
the value of your sales ledger,
usually within 24 hours
of raising an invoice. Invoice
finance is popular as it is
a flexible funding solution
for organisations of almost
any size and industry, from
owner managed business
to large corporations. Your
business could be eligible
for the facility if you sell on
credit to other businesses,
issuing invoices with payment
terms of 30-90 days.
The funds released create
working capital that could
enable you to grow and invest
in your business. In addition,
the facility grows in
line with your business. This
means that as your business
grows, you could have access
to more funding. This makes
invoice finance a particularly
attractive option for seasonal
or growing businesses.
Invoice finance is administered
in two forms: factoring
and invoice discounting.
Both facilities are similar in
that they release the working
capital needed to grow your
business.
How factoring works
You invoice your customers
and send a copy of the
invoice to the factoring provider.
The factoring provider
pays you up to 95 per cent
of the invoice value, usually
within 24 hours.
The factoring provider
chases your customers,
takes responsibility for
credit control and collects
full payment from your customers.
You receive the remaining
balance of the invoice value,
less any charges.
Because factoring allocates
the credit control function
to the finance provider,
it’s suitable for businesses
with lower turnover bands,
ranging from £50,000 and
above.
How invoice discounting
works
You invoice your customers
and send a copy of the
invoice to the invoice discounter.
You retain full responsibility
over the administration of
your sales ledger and debtor
collection.
You receive the remaining
balance of the invoice value,
less any charges.
Invoice Discounting can be
the right solution for larger
businesses with vigorous
in-house credit control procedures,
or which want to
operate the facility without
their customers aware of
the lender’s involvement. Invoice
finance (factoring and
invoice discounting) could be
administered with an added
benefit of credit insurance,
where you do not have to repay
the finance provider in
case your customers default
on payment terms. This is
by means of a non-recourse
facility. In addition, the facility
could be administered on
a confidential basis, where
your customers are unaware
of the finance provider’s involvement.
PMD Business Finance
have access to over 25 different
lenders from small independent
funders to larger
bank invoice finance companies.
We take the time to understand
your business and
ensure that you get the right
funding partner for your
business.
In addition to invoice finance
we can also help you
acquire the right equipment
for your business through
specific asset finance facilities,
that are competitive,
flexible and quick to arrange.
Furthermore loans for business
expansion or protecting
cash flow can also be arranged
quickly and with the
minimum of fuss.
If you think that we can
help you find the right funder
then please don’t hesitate to
get in touch.
CASHFLOW
PROBLEMS?
22 Finance Feature.indd 1 18/11/2019 10:03