The problem with overdraft. line of credit and term loan facilities is that they have a fixed limit, and need to be renegotiated if you want to grow your business. In most cases they're also tied to the value of your real estate assets - usually your home.
If you sell business to business, invoice discounting or debtor finance offer greater flexibility and are better options - especially for a fast-growing business.
Superficially invoice discounting is slightly dearer than an overdraft - but the ability to grow sales exponentially over a short period more than compensates. Being able to discount 80%- 90% of the value of your sales (Cost of Goods Sold+ a margin) within 24-48 hours is a very big plus. You get the balance less the facility fee and interest when the client pays.
The added advantage is that the invoice discounting facility is secured on the assets of your business, principally the invoices for goods and services provided to your customers - your personal fiduciary guarantee is still on the table - but not the family real estate. (A big plus with your life partner?) For more advantages of Invoice Discounting read here.
How flexible is Invoice discounting?
In 2009/10 we arranged an invoice discounting facility for $1.6m to refinance a service firms bank bill facilities and help the 3 remaining directors equally fund a significant portion of the cost of paying out a retiring Director / shareholder when their bank wouldn't assist (read the details here).
Almost 14 years on the firm still uses the invoice discounting facility (with the same lender) as their main source of operational funding.
A wide choice of options
We have approximately 20 lenders on our panel that offer invoice discounting facilities - ranging from the major & second tier banks to specialist niche financers. Each lender has their preferred market segments and industries.
We'll go out of our way to get to know your business, so we can help you find the best funding solution in a timely manner while you focus on your business & clients.
A better solution to your business funding needs starts with a phone call.