Cashflow Finance

Many businesses are well run and fundamentally sound, yet constantly suffer from a debilitating shortage of cash which can eventually lead to the breakdown of profitable trading.

Both Invoice Discounting and Factoring are potential solutions to this problem and with our range of contacts we are able to tailor a facility to suit the prevailing trading conditions.

Typically such facilities can generate 80% of approved invoice value; (sometimes a higher rate may be negotiated in certain circumstances) which is available within 24 hours of receipt of invoice details.

A more comprehensive guide with regard to these facilities is given below:

Invoice Discounting

You continue to receive your customers’ payments and manage your sales ledger and credit control activities. A prepayment facility is negotiated on your invoices of up to 80% (or higher in certain circumstances) and the balance is paid when your customers pay.

There are two options available:

Confidential Invoice Discounting is provided to established profitable companies with a strong balance sheet.

Disclosed Invoice Discounting is provided to companies whose balance sheet is not so strong, and the discounters’ involvement is disclosed to your customers. For many clients this type of facility develops into a confidential arrangement, as the benefits of consistent cash flow take effect and profitable expansion gets underway.

The benefits of these types of facilities are as follows:

Solves cash flow problems, allowing management to concentrate on other business issues.

Receive “Cash on Delivery” but still allowing customers to retain the credit terms previously enjoyed.

Improved return on capital

Allows you to make better use of cash to achieve better credit terms and discounts.

All of the Discounters and Factors used by M3 have access to internet based client communication systems allowing you to obtain up to date information and make enquiries on line.

Costs

The costs of such a facility are divided into two areas, a service charge and interest on the finance. Most companies find that the finance costs are less than that of a normal overdraft facility. There is no set price for the service costs, it being totally dependent on the requirement and the workload involved.

As a guide the service charge for invoice discounting ranges from 0.2% to 0.7% of annual turnover and the finance costs 1.5% to 2.5% above base rate. 

Factoring

This facility offers all the benefits of invoice discounting but without the burden of running your own sales ledger. We look after your customer accounts and provide you with up to 80% (a higher rate may be negotiated in certain circumstances) of the face value of your invoices and the balance when the customer pays.

This has all the benefits of recourse factoring with the added advantage of 100% bad debt protection. Bad debts can have a crippling effect on businesses, but our credit protection scheme will remove this worry.

The Benefits of these types of facilities are as follows:

The procedure is simple and most funds are available within 24 hours from receipt of your invoice details. The factor sends you the money and when your customer pays, sends you the rest.

Costs

The costs are divided into two areas, a service charge and interest on the finance. Most companies find that the finance costs less than a normal overdraft arrangement. There is no set price for the service, it depends entirely on your requirements and the workload involved for the factor. Typically, the Full Factoring service charge is between 1% and 2% depending on whether Bad Debt Protection is provided, and with the finance charge at around 2.5% to 3% over base rate.