Invoice Finance can be a complex field to navigate. Knowing whether it is the right solution for your business and how it fits with your wider funding strategy is only part of the puzzle. There is also the question of factoring versus discounting and now there is single invoice finance available. What sorts of terms can you expect? How do you choose between the myriad of suppliers? In addition to the funding issues there is also the issue of the quality of service you should expect.
As a provider of tailored funding solutions for ambitious SMEs, the FSE Group prides itself in taking a holistic approach to the funding needs of its clients, working with them closely to ensure they are aware of the most suitable options available to them.
As part of this approach, FSE is able to offer guidance on the availability of Invoice Discounting and Factoring facilities to its existing and new clients, in addition to the provision of complementary debt and equity products currently offered by the FSE Group. Our expertise means that you can focus on the needs of your business without having to wade through the quagmire of the Invoice Finance marketplace.
Both Factoring and Invoice Discounting can offer benefits to your business. Many companies use these facilities to reduce the burden on their own accounts department. Others use them to generate cash, which can be used to expand their business, or simply to manage short term working capital peaks.
An unpaid invoice has value. It’s a debt your customer has agreed to pay in the near future and at any one time you will have a number of unpaid invoices on your sales ledger.
Factoring companies will buy or advance the value of your outstanding sales ledger for a fee, often within 24 hours, rather than you waiting 30, 60, 90 days or longer for payment on the product or service you’ve already delivered. The factoring company will take on the liaison with your clients, freeing up your accounts personnel.
Invoice Discounting is a variation of Factoring. In this case you retain the credit control function and management of your sales ledger. Depending on the specifics of the product offered, it is possible to raise finance with an individual invoice. If preferred, a confidential facility can be offered so that the arrangement remains confidential between your business and the facility provider, meaning that your clients are unaware of the transaction.
There are specific business and industry exclusions typically property and construction and businesses that have a great reliance on contractual sales. The facilities are not available to sole traders or partnerships.
FSE welcomes enquiry from SMEs which are established limited companies trading across the UK but with a particular focus on the South East and Eastern Regions of England.
All facilities will be subject to a formal Debt Purchase Agreement with terms agreed with the facility provider prior to facility being drawn.
Each business is different and guidance on pricing can be provided on enquiry.
The principal costs in general relate to:
- the Discount Charge which is usually at a % margin over Base Rate or LIBOR
- the Service Charge which is agreed with you at the outset and based on a % of sales turnover
The facility provider will give full details and explanation of charges based upon any offer made.
For further information contact Ian Baker on 01276 608517 / 07836 331985