A supplier and installer of specialised lighting systems to pubs and clubs was suffering from short-term cashflow problems because of a substantial increase in orders. They needed to purchase the lighting prior to installation and then had to wait at least 30 days for payment.
They knew the problem was temporary so wanted a short-term solution. They opted for a selective factoring facility (also known as spot factoring) which allowed them to choose which invoices to factor as and when they needed additional cash. The selective factoring facility gave the client peace of mind and has helped the business grow stronger.
A growing IT recruitment company supplying contractors to clients in the UK and abroad. They had been working with a factoring company who wasn’t comfortable with the growing export book. A new funder offered an export factoring facility with a funding line of £500k and included bad debt protection, as well as the ability to carry out transactions in 6 different currencies.
The new factoring company agreed a 1 month’s notice period for the client for the first 6 months of the facility, so they could try before committing to anything longer.
This new company was carrying out installation and repairs to hydraulic equipment for construction companies who were taking between 45 and 60 days to pay.
As he had staff to be paid, a small factoring facility was put in place which included bad debt protection. This meant he could draw down 80% against the invoices he was raising every day for the jobs he had completed, thus keeping his staff happy and his cash flowing.
Light Bulb Supplier
This client had orders to supply LED, eco and energy saving light-bulbs to local businesses who knew there were great savings to be had in their electricity costs. The problem was the supplier in China needed payment up front before he would release the goods, but the client didn’t have enough funds available.
In order to help the business get off the ground, an Import Finance Company was introduced. They paid the supplier up front, including import duty etc and the goods were delivered to the clients. The Import Finance Company collected their money from the clients after 30 days and the client invoiced the Import Finance Company for their profit element of the deal.
This meant the client had enough money to pay the supplier for the next consignment himself. If he gets other larger orders, he knows he can use the import finance facility again.