Chelmsford
Invoice finance in Chelmsford
Are you looking for Invoice finance in Chelmsford?
Invoice finance is an umbrella term for factoring and confidential invoice discounting facilities. Both facilities are designed to increase cash flow, with the financier releasing cash against your sales ledger and advancing cash against ongoing sales.
Facilities can be tailored to each individual business’s requirements and can be structured to cover a short-term funding need or provide long term cash to help long term growth. Modern facilities are becoming more like overdrafts with minimal reporting required and instant control through apps on your devices.
Invoice finance in Chelmsford
Benefits
Boost cash flow & Fund growth
Don’t wait for your debtors to pay. Release cash tied up in your invoices to increase buying power with your suppliers and fund increased orders from your customers.
Generating cash from your sales early gives your business the competitive advantage to fund increased orders.
Limited security
The invoice finance provider’s security is the sales ledger. Often they will require a nominal unsecured personal guarantee, however, there will be no requirement to offer tangible security, as would normally be the case with term loans or overdrafts.
Fund acquisitions
If you are looking to expand through acquisitions generating cash from your or your target companies sales ledgers by invoice finance can provide the funding required without the need for personal investment.
Help with collections
Outsource the collection of your invoices to the financier to increase the time you have available to drive growth and sales, whilst maintaining a positive relationship with your debtors by letting the financier have the difficult task of chasing payments.
Credit protection and credit risk advice
By using your financier’s customer risk departments, you can undertake due diligence into the creditworthiness of your existing and new debtors, and ensure that your growth is safe. Use the financier to protect those sales against bad debts or protracted disputes.
Flexible facility
The on-going management of an invoice finance facility enables the financier to get close to and understand your business, your issues, and your requirements. This makes them best placed to increase your facility as your business grows or your circumstances change.
Factoring
Factoring is a working capital facility which advances at a set percentage (typically between 70% – 90%) against invoices raised by the business. Factoring facilities are typically disclosed (ie the lender’s involvement is notified to your debtors) but they can be confidential.
The defining feature of a factoring facility is that the lender will assume the role of credit controller and undertake the collection of invoices on the business’s behalf. This has advantages, such as allowing the business owner to fully focus on sales and the growth of the business; but also disadvantages, such as the concern that the relationship between business and debtor could be negatively affected.
Invoice Discounting
Invoice Discounting is a confidential working capital facility. It operates under a similar premise to a Factoring facility. However, with an Invoice Discounting facility, the lender’s involvement in founding the business is kept confidential and the credit control and collection of the business’ invoices remain the responsibility of the business.
There are some other subtle differences compared to a Factoring facility. Notably, the lender will fund against the sum of bulks of invoices rather than individual invoices. The lender will also set up a trust account in the name of the business and to which payments are made by your debtors.
Uses of Invoice Finance
- Designed to boost cash flow over a sustained period and aimed at leveraging cash against the whole ledger to release an initial advance of cash and then further advances with each invoice.
- Boost cash flow to take on multiple orders.
- Grow safely as the facility grows with your business.
- Negotiate better terms with suppliers.
- Help with long term planning and growth strategy.
- Enable acquisitions of competitors.
- Advancements rates up to 90% depending on the industry sector.
- No tangible security required.
How Much Does Invoice finance in Chelmsford Cost?
There are three main fees associated with invoice finance facilities which are detailed below. Many lenders have other ‘disbursement’ fees which can add to the overall costs. As such it is best to consult with an expert if you have any questions or queries.
Arrangement fee
This is the fee for setting up the facility and is typically taken from the initial advance by the Invoice Finance Lender. Usually, it is charged as a percentage of the facility funding limit (typically 1%) but can also be a fixed fee amount.
Service charge
The Service Charge will be the main charge in an Invoice Finance facility. This is applied as a percentage of the sales that are put through the facility. For example, if the Service Charge was 1% and you loaded a £1,000 invoice for funding against the Service Charge would be £10.
Discount margin
The discount margin is the interest rate for borrowing the money that the lender makes available. The rate is quoted as an annual rate but is applied on a daily basis and only against the amount that is being borrowed and only for the duration the money is borrowed.
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Mr Anderson
Invoice finance in Chelmsford
How Oakmead Finance Can Help
With over 20 years of experience in structuring facilities across all sectors from startup businesses to corporate entities, we are best placed to advise and structure the right facility for you.
Contact us if you would like to explore the invoice finance options available to you or if you would like us to review your existing finance facility.