Can you secure lending against invoices?

[DavidWH]

Perhaps one for @Ian J

I've seen a few people who've fallen through the cracks with the Grant's and support at the moment.

One is struggling to get paid, being told they wont get paid for 2months.

Is it possible to secure lending against these invoices, provided the customer is sound?

I know you can set up factoring agreements, but if the invoice has already been issued is it possible?

 

[Mark T Jones]

Yip. Like you say @Ian J is your man

 

[KAC]

I am sure that @Ian J will be along soon, but this seems to be what you are looking for. I don't know that it can be put in effect retrospectively, but it may help for the future

 

[DavidWH]

It's the retrospective bit that got me thinking.

I don't require it, I was just thinking out loud about possible solutions.

In reality, I would imagine the bounce back loans would be more favourable. However if they're not eligible, securing against a customer could work?

 

[Gordon - Commercial Finance]

One is struggling to get paid, being told they wont get paid for 2months.

Depends on the terms of the invoice, and really the strength of the company invoiced. I imagine it would be a struggle for example if the invoice had been issued with 14 day terms and the company were struggling and were late paying.

If the invoice had been issued with 60 day terms and the company are otherwise sound then it may be possible. The devil is in the detail though.

If someone is struggling to get paid, invoice finance really can’t serve as a debt collection service alone.

 

[Ian J]

I've seen a few people who've fallen through the cracks with the Grant's and support at the moment.

One is struggling to get paid, being told they wont get paid for 2months.

Is it possible to secure lending against these invoices, provided the customer is sound?

In a word "yes"

Normally factoring companies would like a client for twelve months but one has reduced this to a minimum three month contract and additionally there are factors specialising in single invoice or single customer factoring with no contract tie in at all

 

[Neil Lukins]

In theory YES you can get funding against these invoices. Every lender will review the detail on a case by case basis. Lenders are naturally now more cautious and so are leaning more towards businesses who haven't been affected by covid19.

With over 15 years in the Invoice Finance sector I've seen many changes and you can now just Finance single Invoices without any contracts.

Typically the costs are circa 5% of the Invoice to get around 85% up front and then 15% when the debtor pays.

The main concern at present should be around raising Finance against your invoices and then the debtor not paying within 120 days from the Invoice date. The lender will then reassign the Invoice back to you and request their payment back from you - potentially enforcing debentures or PGs. Basically putting you in the same position as you was previously if not worse as you will have the lender to deal with.

We work with over 30+ Invoice Finance lenders across the UK if any members need any free advice.

 

[Ian J]

With over 15 years in the Invoice Finance sector I've seen many changes.

Not as many as I have as I started out in the industry in it's infancy in this country probably before you were born

 

[Mark T Jones]

Not as many as I have as I started out in the industry in it's infancy in this country probably before you were born

It's a tough cal, deciding between a regular contributor to the forum or someone who only bothers to contribute when there is a sniff of commission..

 

[Gordon - Commercial Finance]

It's a tough cal, deciding between a regular contributor to the forum or someone who only bothers to contribute when there is a sniff of commission..

I know which one I would listen to. I don't think the other even read the post!

 

[Neil Lukins]

It's a tough cal, deciding between a regular contributor to the forum or someone who only bothers to contribute when there is a sniff of commission..

Mark - I only contribute mainly on Finance related topics as
1) This is my occupation and has been for over 20 yrs
2) It adds value and another opinion for consideration
3) I dont contribute as regular as some as I have limited time and cant add value to the many topics so decline to comment.
4) It also should not matter if you have 5 posts or 5,000 posts.

With regards to "sniffing" commissions. I would be more than happy to give any Invoice Finance related commissions I make from this site (if any) back to the business or a charity of their choice. To re-affirm I contribute to add value and not to make any money.

I know which one I would listen to. I don't think the other even read the post!

Yes the post was read and answered accordingly.

 

[Gordon - Commercial Finance]

Mark - I only contribute mainly on Finance related topics as
1) This is my occupation and has been for over 20 yrs
2) It adds value and another opinion for consideration
3) I dont contribute as regular as some as I have limited time and cant add value to the many topics so decline to comment.
4) It also should not matter if you have 5 posts or 5,000 posts.

With regards to "sniffing" commissions. I would be more than happy to give any Invoice Finance related commissions I make from this site (if any) back to the business or a charity of their choice. To re-affirm I contribute to add value and not to make any money.



Yes the post was read and answered accordingly.

Did you miss the bit about this being an invoice that the debtor was “struggling to pay”? It’s not on 120 day terms. They’re more likely to need debt collectors, not invoice finance, and they’re also more likely to get it.

 

[Neil Lukins]

Did you miss the bit about this being an invoice that the debtor was “struggling to pay”? It’s not on 120 day terms. They’re more likely to need debt collectors, not invoice finance, and they’re also more likely to get it.

Thanks Gordon for your response.

The part about the 120 days was additional general advice around Invoice Finance and had nothing to do with the posters original request.

I was trying to make a point about businesses treading carefully about using Invoice Finance in the current climate if there are concerns over their debtors or their sectors.

If the debtor is "sound" per the original post then yes IF should be possible and if factoring a single invoice then the lenders will usually insist they complete the debt collecting- so in essence two services for the price of one and answers the posters question - whichever way we both interpet it.

 

[Gordon - Commercial Finance]

had nothing to do with the posters original request.

 

[Ian J]

If the debtor is "sound" per the original post then yes IF should be possible

In this day and age it is difficult to know who is sound and who isn't. I have been trying to place a single customer facility for about £300,000 where the customer is Jaguar Land Rover and whilst a few factors will do it with credit insurance not one credit insurance company will issue a limit against JLR.

There are one or two other difficulties with the deal that make it difficult but the over riding opinion of the general public is that Jaguar Land Rover is an undoubted credit risk.

As an aside it seems that many major manufacturing companies are going to be in serious trouble when the big restart happens as suppliers will only supply with credit insurance cover and the insurers swill be declining risks left right and centre.

Perhaps government intervention will be required in some form or another

 

[Porky]

LOL, Yikes, it’s like handbags at dawn in this thread .. I bet a few played how high can I wee up this wall as a kid

I think the isolation is affecting some,

 

[Marcus A. Wright]

LOL, Yikes, it’s like handbags at dawn in this thread .. I bet a few played how high can I wee up this wall as a kid

I think the isolation is affecting some,

Yes seems like a very pleasant place this forum, only the "Big Shots" are allowed to comment it would appear.

 

[Ian J]

seems like a very pleasant place this forum, only the "Big Shots" are allowed to comment it would appear.

At least your so called Big Shots responded in a timely manner and didn't resurrect the thread after 10 months for no real reason apart from having a dig