Looking to finance your debtors but need to make sure you get the right package?
We at 4 Business help you get it right using our many years experience and long term relationships with a wide range of specialist banks & finance providers
SIMPLE
EFFECTIVE
FLEXIBLE
If you get it right!
COMPLICATED
PROBLEMATIC
DIFFICULT
If you get it wrong!
"BUT IT'S SO SIMPLE, I DON'T NEED ANY HELP"
Debtor Finance is undoubtedly the easiest form of finance for a trading business to raise BUT sadly not many business people understand the complexities of the Factoring and Invoice Discounting marketplace. It is a market place full of enthusiasm and sales managers driven by targets and knowing that as long as your debtors are good they can get you financed.
There are, however, a great many important elements you need to consider to ensure your debtor finance facility is the one best able to help YOUR business grow and prosper. The wrong facility could put damaging restrictions on your cash availability and have an opposite detrimental effect on your business growth.
THE ISSUES TO CONSIDER
Factoring – Recourse or Non Recourse ?
OR
Invoice Discounting – Fully confidential or disclosed ?
Insurance included or non-covered ?
Debtor Quality – do they like my debtors ? Contractual, proof of delivery, paperwork
Payment Terms – 30, 60 or 90 day terms. What is your debtor turn ?
Credit Limits – How are they set and how will they affect funding percentages ?
Concentration Limits – a big one that often trips up actual cash drawdowns!
Online Systems and ease of drawing down money
Fees – turnover based, all inclusive or added costs
Interest Rate – is it competitive and cost will be affected by debtor turn
Debtor Collection – included in service or still down to you ?
Other costs – payment drawdown fees, credit limit fees, CHAPS costs
Arrangement fees and annual review fees
Security – Just book debts, full debenture & affect on other lenders, priority deed...
"AREN'T THEY JUST ALL THE SAME?"
Every financial company in the Debtor Finance Marketplace has a slightly different way of operating. Most of them are better at either Factoring or Invoice Discounting but most will offer both. Some specialise in small business but pricing is always turnover driven. Some specialise in offering a full service saving you the staff cost of collecting debtors and some specialize in pricing without it and leaving you with control of your customers.
Some companies will consider more contractual debts and some specialize in that and will even do building contracts whereas most wont touch that under any circumstances. Concentration limits is another area where debtor finance companies can be very different and they are absolutely key if the facility is going to work for you.
There is also an array of bolt on’s that some companies can also provide with specific Stock, Trade or Asset finance. Many are also able to offer the Business Growth Scheme loans either as a short term loan or as a top up to get a higher % or cover some high concentration or credit limit issue on the debtor finance facility.
It is not hard to see that you there is a lot more to consider than there seems initially!
the answers and let us help.
We have people who have been dealing with this type of finance and the companies offering it since the late 1980’s. We have seen many enter the market and a good many leave. When it first started it was seen as a lender of last resort when the high street bank pushed you away but it has matured over these last fifty years to become the main source of working capital finance for UK trading business’.
In that time these lenders have refined their systems and their services based on years of experience and now we have a plethora of options given the explosion of online banking services and secondary challenger banks. It has never been easier to get debtor finance but that makes it all the more important that you get the right package from the right company.
Here at find we help you make the right choices
and we make it as simple as possible.
Get in touch today
We are here to assist, fill out our enquiry form and our team will be in touch as soon as we can.
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