Factoring and invoice discounting – speeding up the sales – cash process
Business to business sales always have cash-flow issues endemic within the invoicing process.
Your business delivers goods or services, provides an invoice on completion and then waits for payment. Your terms might be 7 days, 30 days or 90 days but customers will always stretch payment terms to the maximum (or beyond!).
Growing business gets stuck in a cash-flow spiral, unable to grow until invoices are paid, forever waiting for incoming cash even though they are growing sales.
Sometimes, successful, growing businesses run out of cash for this very reason.
By using invoice finance you can shorten this process as follows;
- Your business provides the goods or services as ordered.
- You invoice the customer and inform the finance company of the invoice (generally on-line).
- Up to 90% of the invoice amount is immediately available to draw down into your bank account.
- Your credit control department (if you have one) continue to chase the customer (invoice discounting) or the finance company assist by outsourcing credit (factoring)
- The customer pays the invoice and the loan is cleared.
The great thing about factoring or invoice discounting is the rinse and repeat part. Each invoice you produce goes back into the process and increases the level of funding your business can take. Meaning as you’re growing and the business is growing, so the cash available increases.
We’ve been arranging funding since 1997 and, if you’ll forgive us for boasting but we think we’re quite good at it!
In fact – 7 x UK Best Broker Awards back us up in that assertion, so does our 5 star customer feedback.
So -for your buy to let mortgage needs, or anything else funding – make sure you use a broker you can trust.
What can I use a business loan for?
For cash-flow, business development, stock or growth, a business loan could be ideal.
In fact – so long as it’s legal you can probably raise funds to do it!
Alternatives to a Commercial Mortgage
In terms of the interest rate and repayment profile the mortgage is generally the best option for financing property.
Of course there are situations when a business mortgage won’t be available – you can see the general requirements for a successful mortgage application below.
How to get a business loan
The general requirements for a successful commercial mortgage application are straightforward and similar across all lenders;
- Who is the applicant?
- What are the funds for?
- How will the funds be repaid?
Different lenders will set different height “bars” for each of the three requirements. For instance some lenders might require significant business experience or set a high debt servicing cover requirement (DSCR – profit compared to mortgage payments.)
For more information on how to get a business loan click here. (Coming soon)
Bridging loans for businesses
There is a variety of circumstances which could make a business mortgage unavailable, these might be around the applicant, the business or around the property.
Bridging finance can be used to meet a number of these areas;
- Property improvements.
- Starting up a business in the property.
- Business development.
- Short term funding needs for other reasons.
A more flexible alternative to a commercial mortgage, especially a remortgage could be a business loan. The requirements for a business loan might be less stringent, especially around the property.
Because the repayment term of a business loan (especially an unsecured loan) will be much shorter – the repayments will be much higher, even for a smaller amount (Using our commercial mortgage calculator compare a 25 year term to a 5 year term and see the difference in repayments.)
Contact us now on 0808 164 2364
Acorn.finance – 4th Floor, Silverstream House, London. W1T 6EB