single invoice finance
single invoice finance
Applied Corporate Finance
single invoice finance
single invoice finance
single invoice finance single invoice finance single invoice finance single invoice finance single invoice finance single invoice finance
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Property finance
Asset finance
 

Cashflow finance*

Without cash most companies will not survive.  Cash can be released from a company's assets using the techniques below.

Equity release

A working capital facility for a new business venture for an existing company was financed by creating 2nd charges over commercial property with sufficient equity.

 

Invoice discounting & Factoring

1 A distribution company was given an invoice discounting facility with a limit of £2.5m. The debtor book included contras and export sales and one customer made up over half of the sales ledger.

2 Lacking resources to chase overdue invoices, a processing company needed a steady flow of cash and free itself from its credit control process by outsourcing it to the lender.

The company was provided with a facility which would free up over £25k locked in unpaid invoices.

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Payroll

A food manufacturer with turnover of £8m needed additional working capital to buy equipment to expand production capabilities.

A facility of £125k payroll funding was provided.

 

Sale and leaseback (SLBT)

A food manufacturer needed £30k for a franchise opportunity.  The company owned £70k of equipment that could be sold and leased-back to the business to release part or all of the cash required.

SLBTs to realise cash in commercial property can be combined tax efficiently with directors' pension funds (SIPP).  The company property is sold to the SIPP and leased back.  The rent may be treated as business expense and any gain in property value is free of capital gains tax.

Invoice discounting & Factoring explained

If you need to generate cashflow quickly, your invoices can be liquified using invoice discounting or factoring, providing you with up to 90% of their value in as little as 24-48 hours and the balance upon invoice settlement. 

If you prefer, your debtors need not be informed and you can delegate the administration of your sales ledger to the lender releasing time for you to spend on your business. 

As your business sales increase, you can raise increasing amounts of cash through these techniques, and even more to finance rapid sales growth. 

Credit risk can be transferred to the lender or retained. Spot factoring enables a single invoice to be factored rather than the whole sales ledger.

Spot factoring explained

In essence, it involves a business selling one (or more) of its debtor invoices to get the cash sooner rather than wait for the invoice to settle on its payment date, which could be 30 or 60 days later.  
Spot factoring therefore provides a cash injection when a business needs it  The cash paid upfront to the business by the spot factor is a percentage of the invoice face value - e.g., up to 80%, with the balance paid when the invoice is eventually paid.

The cost payable by the seller for spot factoring is the cost of receiving money ahead of the invoice settlement date.  It accrues daily and is deducted from the amount paid by the debtor on the invoice settlement date.  The balance is paid over to the company.

There is no arrangement fee, periodic servicing charge, or termination charge, and no commitment on your client to sell any further invoices.  The facility is therefore very flexible - more flexible than many of the conventional factoring or invoice discounting facilities that banks offer.


Spot factoring should only be used by your client as a temporary cash flow remedy and not as a means to transfer debtor credit risk.  Credit risk might be retained by the seller and the factor might ask for a personal guarantee from the seller for added protection in case of default by the debtor.

* the transactions described on this webpage were not arranged by ACF