Case Study - £400,000 Invoice factoring facility

£400,000 Invoice Financing Secured for New Client  

This case study looks at how we secured an initial facility of £400,000 from an invoice finance company for a new client, who needed a quick response and solution, having won several large new contracts. This supported them in terms of cash flow and working capital during a significant growth phase for the business.

Why was Invoice Financing Needed?

The enquiry was referred to us by an existing client. The new client had developed and introduced two brand new products for the construction industry and was now experiencing a high volume of new customer enquiries.

The turnover of the company at the time of the enquiry was around £500,000 p/a,  however after winning new orders through a number of large blue chip clients this was due to increase significantly. The projected turnover for the next 12 months was c.£3,000,000 p/a.

Such growth levels can put a strain on a company’s resources, particularly with cash flow and the need to raise working capital. In this case most of their initial costs were for providing materials and staffing, so the majority of costs were likely to be incurred up-front.

How we Approached the Invoice Factoring and Working Capital Needed.

Using our common sense approach we took an in depth look at the trading cycle of the business, from receiving an order through to the invoice being raised and eventually paid by the customer.

Our research showed that the client had an ‘out-of-funds cycle’ where they were waiting on average 45 days or longer for payment of their invoices. Invoices could only be issued upon completion of each project and each project typically took up 28 days to complete.

This left the client incurring significant costs long before an invoice was even issued. This meant although positive and fast growth was being achieved, the potential for cash flow problems was considerable.

Our Immediate Invoice Factoring Solution

After assessing the options available we were able to provide an immediate solution and source the funding to support both the cash-flow and working capital requirements of the business as it grew

 We helped the client secure an offer from the most suitable invoice financing company of an initial £400,000 facility on a non-recourse basis, protecting the business from any bad debts. The facility gave a 90% advance of funds against the existing debtors and future invoices. In addition we were also able to source a separate stock in trade facility to help with providing additional working capital to enable the business to purchase materials for the new orders.

With the new facilities in place the client was able to continue to look after their existing customers and develop the new enquiries quickly and efficiently for the business. We are pleased to report that the business is going from strength to strength.

Contact Us if Your Business Needs Invoice Financing

With our in-depth knowledge of Invoice Finance providers we were able to deliver the right invoice factoring and working capital solution for this client quickly and efficiently. If your business is in need of an invoice finance arrangement, whether invoice factoring or invoice discounting, contact us or call us on 01675 433878 for an initial chat.