Never too small for Confidential Invoice Discounting

Andy Grantham discusses in the ins and outs of invoice discounting

Traditionally Confidential Invoice Discounting has only been available to the larger businesses and most mainstream and indeed many independent invoice finance providers have high entry requirements to obtain this lucrative type of funding.

The smaller companies are usually steered towards Invoice Factoring, which includes full credit management which many small businesses have no need for.

Strict criteria such as a minimum turnover of £2 million, profits over 3 years or minimum net worth of £50k are used to exclude the smaller business from eligibility, whereas in reality the nature of the invoices, which are provided as security, are as robust as any multi-million pound business.

Pragmatic approach

Here at Skipton Business Finance, we have a pragmatic approach. We are interested in what facility best suits the client’s needs and, provided we have the confidence that they can run what should be a low risk facility, we are happy regardless of the size of the business.

Ultimately it’s all about systems.

If the internal operation is robust enough and creates solid, tangible invoices which are easily collected with little dispute, we are less concerned with historic balance sheet performance and more about the business moving forward.

What we can offer you

We have structured Invoice Discounting deals for small businesses in turnaround and with turnovers as small as £100k purely because the client has provable systems and an excellent accounting function. There is no benefit for SBF to become involved in the collection of the invoices or providing sales ledger administration as the businesses we have funded just needed increased cash flow.

Through our partnership approach to business we are happy to advance the cash and let the client collect the invoices. This allows the client to preserve their close customer relationship whilst giving access to flexible funding which will then ultimately grow in line with the business.

Top tips to good systems

Business owners need to ensure they are on top of administration with effective credit control systems in place.

Here are my top tips to help ensure you business passes muster:

  • Ensure your payment terms are stated clearly on the invoice
  • Implement stringent credit control procedures for chasing outstanding invoices including monthly statements and chasing letter
  • Record all activity and responses in a diary or log
  • Only raise the invoice when the whole job or service has been provided, signed off by the customer and there is little room for dispute
  • Ensure any necessary paper work required to prove the goods have been delivered or the service provided is to hand, should it be required

If you would like to hear more about our fast and flexible invoice finance solutions, why not speak to one of our award-winning experts for a no-nonsense chat.