Invoice finance for businesswoman seeking to expand her company

THE SCENARIO

Enness Commercial is an industry leader in providing commercial property mortgages, but we’re also extremely experienced in helping to arrange secondary services, such as invoice finance, to help with business cash flow.

Having previously used Enness to secure development finance, a client recently approached me to ask for further help. My client was a successful businesswoman in her fifties who ran a company with a turnover of £1million a year. Her business was growing and she felt she needed to expand on several fronts. My client had two key goals; to expand the marketing of her business by hiring a marketing team, and also to move premises into a newer, better located sales suite.

Her business was technically generating the revenue to pay for this. However, she was experiencing a cash flow problem as many of her debtors had not yet paid their invoices. If these debts had been paid, it would have given her the money she needed to hire staff and move premises.

OUR SOLUTION 

I therefore suggested to her that she use an invoice finance facility. Invoice financing allows companies to plug a gap in cash flow where they are waiting for invoices to be paid, as the lender will service the debt in the interim. There are two types of invoice financing: factoring, in which a company sells its unpaid invoices to a third party, and discounting, where the company remains in control of collecting its outstanding payments. I opted for the second option to allow my client to stay in control of her debtor book.

It was difficult to arrange this because my client’s business had not shown a profit in a previous year, which can be a bar to securing an invoice financing facility. However, I explained my client’s circumstances and highlighted her generally successful track record. As a result of this and my excellent relationship with the lender, I was able to arrange this facility for my client.

This improved my client’s cash flow, meaning she could move forward with her plans to rent a new sales suite and employ a marketing team. My client was delighted with this, and I look forward to working with her again in the future.