How to finance large orders quickly when the bank won’t lend

The logistics of financing large business orders can give business owners a financial headache. Large orders often demand an upfront drain on resources. And if a customer stretches payment terms, financial difficulties can follow.

This is the story of a Southern-based market research company that used single invoice finance to boost cash flow, after is was put under strain following a large order from an existing client.

Having been awarded the new order, the company’s customer demanded that its payment terms be extended from its standard 30 days to 60 days.

The average invoice value generated from the new order was expected to be in the region of £15,000.

Despite the company’s existing client base remaining on 30-day payment terms, the company soon moved from being cash positive to cash negative.

The company’s first step was to contact its bank. Unfortunately the bank declined to provide an overdraft. Instead it introduced the company to its invoice finance division.

In fact in the search for a solution to its cash flow problems, the company contacted a number of invoice finance companies.

However it found that full service invoice finance facilities were not flexible enough to meet its needs. The company only needed to borrow money on an occasional basis, as and when it was awaiting payment from its largest customer.

Furthermore it didn’t want to change the nature of its relationships with its other customers, which would happen if the company factored its invoices.

Finally, the company engaged the services of a business finance broker who recommended single invoice finance.

Single invoice finance is ideal for short-term finance needs. It is a business finance tool designed to be fast and flexible.

Resources were on hand to quickly credit check the quality of the company’s large customer and get comfortable with the invoice paper trail.

As a result an offer of a facility was made to the market research company within 3 working days of the enquiry being received.

The market research company accepted a single invoice facility that provided it with 80% prepayments against invoices.

Not only did this allow the company to finance invoices for a single customer on an ad hoc basis, but it also enabled it to finance the large order without altering its relationship with the rest of its customer base.

For all that, it also solved the company’s cash flow problems to boot.

Industry sector: Market Research

Facility provided: Single Invoice Factoring

Total Facility: £25,000