Receivables sale and factoring
The money sits in unpaid invoices while purchasing and wages carry on. Anyone selling on credit terms is financing their customers as well.
Requirements
- ·ongoing turnover with commercial customers
- ·clean invoicing
- ·no assignment bans in the contracts
- ·debtors with sound credit standing
What matters
A distinction is drawn between true factoring with bad-debt protection and non-true factoring without it. The assessment runs through the debtor structure, not only through your own balance sheet.
Typical duration, from experience: usually two to four weeks from complete documentation to the first payment.
Guarantees and bonds
The client requires security before building or delivery. The usual forms are advance payment, performance and warranty bonds, plus the rent guarantee.
Requirements
- ·order book
- ·earnings position
- ·existing lines and how far they are used
What matters
A bond facility ties up no liquidity; it only draws on the security line. Besides the bank, surety insurers can be considered, which relieve the house bank's facility.
Typical duration, from experience: two to four weeks, faster where a banking relationship already exists.
Working capital and overdraft
Stock, staff and seasonal peaks have to be pre-financed before the turnover comes back in.
Requirements
- ·the latest annual accounts
- ·current management accounts with trial balance
- ·debtor and creditor lists
- ·an overview of existing liabilities
What matters
Working capital is decided on debt service capacity, not on security. Anyone who presents the figures already worked up negotiates from a different position.
Typical duration, from experience: three to six weeks.
Start-up and takeover
Starting up, buying a business, or buying into an existing company.
Requirements
- ·a viable concept backed by figures
- ·debt service capacity over the first three years
- ·own funds
- ·on a takeover, the seller's figures
What matters
Development loans and the guarantee bank replace missing security, but not the arithmetic. The application goes in before the business starts, not after.
Typical duration, from experience: six to ten weeks, and longer where development loans are involved.
There are deliberately no terms, fees or commissions here. They date quickly and say little about what is actually possible in your case. The durations are values from experience, not a commitment. Which solution works follows from your figures.
Talk through the documents
Bring the latest annual accounts and current management accounts – they show which of the four routes actually works.