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The UK invoice finance market is a considerable industry with client turnover of over £88 billion pounds last year and with the number of providers ever increasing. Therefore unlike the historically restricted choice
of overdraft finance the option of providers of invoice finance is very wide. Most businesses trading on credit terms to other businesses can be supported whatever their nature or financial position. There are though
one or two exceptions. To explain these we are better to initially discuss the nature of business that best suits factoring and invoice discounting.
Factors are primarily interested in the 'collectability' of your trade debtors in the event that they have to collect in their security. That is the consideration of the hypothetical situation that your business has
ceased to trade and the factor has to collect monies in from your customers, possibly without your assistance and without your business being able to fulfil future orders or obligations.
There are a significant number of areas that can effect the factors assessment of the collectability of your debt. In fact we could probably list potentially 40-50 different possible areas of consideration. Naturally
not all or any of these may be applicable to your company. These for example may include contractual obligations to customers, sale or return terms, product warranties provided, stage payment terms, high exposure to a
dominant customer etc etc. We do not propose to outline every area here and would strongly recommend that you use our free advice service or Invoice Finance Search to let us assess your particular business.
Importantly the opinion given to these points can vary substantially between factors. It is therefore important to understand the operating parameters of each factor and match these to the nature and needs of your company.
The 'ideal' debt for a factor is one that includes the following characteristics:
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· Your invoices are in respect of completed orders and payment by your customer is not reliant on your company fulfilling ongoing obligations, such as contractual obligations to further supply, fulfilment of the next associated
stage of the order, ongoing maintenance etc.
· Trade debt that is also supported by a good audit trail, including importantly proof of delivery i.e. signed delivery notes, timesheets etc.
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Few businesses though meet the 'ideal' and are affected by at least one or two likely issues. A large number of these points though often simply effect the likely terms offered to your business or which factor is willing to
assist rather than an inability to provide facilities at all. Therefore most companies can be supported given the varied and sometimes specialist providers we at Blue Asset Finance are in contact with.
Typical industries that generally meet this very simplistic description and are significant users of invoice finance include (although is not exhaustive to):
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Wholesale suppliers
Manufacturing
Engineering
Printing
Haulage and distribution
Providers of recruitment and labour
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Reversely then the most difficult businesses to support through invoice finance are those:
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· Who invoice for work in progress or issue stage payments against a particular contract.
· Have little in the way of audit trial supporting the raising of invoices, including customer acknowledged sign off, satisfaction, receipt etc.
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A typical industry with these characteristics is that of construction.
The advantage though of our no obligation service is to cut through any doubt and avoid wasting your valuable time in finding the right factors for your business. Do not hesitate to contact us; do not assume that your business
may not be 'factorable/discountable'. We have contact with almost 80 different providers of invoice finance each with different criteria. We can save you time and money guiding you to the right people to speak to, who are most
likely and best positioned to meet your requirements.
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