Some examples of how businesses have used factoring to develop and grow.
A manufacturer of automotive components was having cashflow squeezed because their largest customer, a blue chip name, announced they would only pay suppliers after 90 days. At the same time the manufacturers own suppliers were getting tougher chasing their own bills. The overdraft was too limited to help so an invoice finance facility was put in place enabling the manufacturer to access 90% of invoice values – the day the invoices are raised.
A new start recruitment company set up by an enterprising young person had no security to offer a bank but needed a finance facility or there was no business (His parents offered guarantees but the proprietor desperately wanted it to work without that type of external support). A full service factoring facility was put in place providing 80% of invoice values as soon as they were raised with the factoring company also providing full sales management – enabling the business proprietor to utilise his great skill of internet development to the maximum.
A distributor of industrial adhesives could have really struggled when two customers went bust in the same week. Luckily the business had an invoice finance facility with credit cover built in. Both the customers in question were covered so whilst the business has suffered in losing two customers at least the amounts outstanding were recovered.
A businessman had, via a contact, an opportunity to import DVD players from the Far East and sell to a UK supermarket. The only problem was the supplier wouldn’t release the goods without pre-shipment payment. Utilising a trade finance facility the supplier was paid, goods were shipped and then delivered to the UK supermarket.
A small manufacturer of bespoke furniture had creditworthy customers in Spain, Germany and Portugal. An export factoring facility enabled the business to access 70% of invoice values, as soon as the invoices were raised and the invoice financier was also able to offer a collection service having access to UK based collectors with a range of linguistic capabilities.