As everyone in business knows, cashflow is vital to the success of any venture. In times of economic turbulence, it is even more critical to ensure your business has sufficient cash to maintain its operations and pay its way.
This can be achieved in a number of ways by using tried and tested funding instruments or making your business processes more efficient to positively impact the cash position of your company. Here we list a number of ways we can help – but this is not exhaustive. If any of the following solutions strike a chord with you then please don’t hesitate to get in touch.
Invoice Finance is a generic term to cover products and services such as:
All of these to a greater or lesser extent achieve the following:
- Client receives up to 90% advance of invoice value
- Freedom for business to retain control of their sales ledger or to outsource this to the lender
- Invoices financed can be domestic or export sales
- Typically, a confidential facility or can be disclosed where the funder requires greater visibility
Do you use invoice finance facilities and service customer overseas or trade in other currencies?
Export factoring could support your cashflow.
Export factoring is the purchase, funding, management and collection of short-term
accounts based on goods and services provided to foreign buyers. We provides services to
support with invoice finance – finding the best funder for each client’s specific needs – and
accommodating trading with other currencies through export factoring.
So if you trade overseas, or you’re thinking about it, we can support you to develop
your export business whilst supporting a healthy working capital and limiting
challenges often faced by businesses expanding overseas.
How it works
1. Funder confirms a credit limit on supplier’s overseas buyer.
2. With the limit, supplier ships the goods and provides proof of shipment to the funder.
3. Funder advances up to 90% of the invoice value to the supplier.
4. Buyer received 120 days of credit period.
5. Buyer pays funder, and funder pays out the balance to the supplier.
Trade finance can provide upfront funding against confirmed orders, open up letters of credit facilities on your behalf, and provide direct supplier payments or even a cash advance.
Suitable for businesses who have confirmed purchase orders/supply contracts from reliable sources. You can secure stocks but you have limited working capital to fund the purchase.
Using a Trade Finance facility is straightforward:
- Place your order with your supplier
- The Trade Financier will pay your supplier against shipping documentation or open a letter of credit for up to 100% of the purchase price of the goods
- The goods are shipped and ultimately delivered to the client’s customers
- The client will repay the transaction either by way of:
- Within 90 days from the transaction date
- Through a linked to invoice finance facility
There are numerous business loan products that have replaced traditional bank products that provide working capital from SME businesses.
The emergence of creative fin-tech lenders has plugged the gap left behind the regression of the main banks in the last dozen years or so. Choosing the right provider for the right circumstance of your business is what we do so click this link if you would like to talk to a member of the team about what options are available, please get in touch.
This is a growing segment of the lending market and provides a solution to many business funding requirements quickly and efficiently.
A business might need cash for a project, an acquisition or just additional cashflow through a difficult period. By utilising assets that have equity in them, either inside or outside of the business, you can release monies to be used in the business and repaid either out of cashflow, sale of the asset, or refinance of it. This can give from £50,000 to £5,000,000 of funding to a business quickly and efficiently over a term of up to 36 months.
This is more often premium priced because of the risk attached, but it tends to be on a ‘pay for what you use’ basis. Interest can be serviced or rolled up depending on the security and circumstances giving maximum flexibility. The main points to consider for a loan like this are:
- What is the security being offered?
- Can the loan interest be serviced?
- How will the loan be repaid?
A flexible and popular funding solution for businesses that have available assets and need to make decisions really quickly.
Got a complex working capital problem?
That’s our speciality. For a free no-obligation discussion feel free to contact us
Tax Funding
One of the lesser known solutions in the working capital space is the specialist lending available to fund tax obligations.
The market has developed tools to assist businesses with funding different tax scenarios and the use of these different solutions is becoming more widespread as lenders refine their products. The important thing to understand is these products are very proactive. Typically clients looking at this type of funding to support working capital would look to engage well ahead of time, to fund current and upcoming tax obligations.
Download our Tax Funding PDF for more details or contact us to speak to our friendly team.
Examples of tax funding facility
1. VAT Loans
These are short-term loans specifically designed to cover VAT liabilities. They provide businesses with the necessary funds to meet their VAT obligations on time. These typically fund VAT balance over the following quarter in 2 or 3 capital payments.
2. VAT Bridging Finance
This type of financing is used to bridge the gap between a business incurring a VAT expense and subsequently reclaiming it. Typically used in property transactions where the property has a VAT liability as part of the purchase. Funding provided in bridge style with the lender funding the VAT payment to HMRC and directly receiving the proceeds of the VAT claim.
3. R&D Tax Credit Advance
This is a form of funding a company can receive as an advance against its expected R&D tax credit refund. Loan is structured against a business‘ R+D claim with the advance a fixed percentage. Repayment directly to lender who would then distribute any proceeds after deduction of interest and fees.
4. Corporation Tax Loans
Loans designed to help companies meet their Corporation Tax obligations. They are often structured to align with the company’s tax payment schedule. Profiled over 12 monthly payment or less allows clients to manage and structure cashflow spreading the corporation tax balance.
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