Cash Flow Finance

There are a few finance products that can be described as cash flow finance. These are typically invoice discounting, factoring, trade finance and overdraft facilities.

Overdraft facilities secured by way of a debenture have become almost impossible to obtain from banks without additional security. The reason for this relates to a legal case – Natwest v Spectrum Plus Ltd

Factoring and Invoice Discounting are often referred to as invoice finance.  These facilities are readily available to businesses that sell on credit terms to other businesses. Invoice Finance is provided by the high street banks and also an array of independent providers.

Trade Finance typically facilitates imports and exports. It can provide a valuable source of finance but can also protect both customer and supplier as it ensures that funds are released to the supplier but only when the right goods in the right quantity of the right quality are provided at an agreed point.

By combining trade finance and invoice finance if you have a confirmed order from a credit worthy customer you can fund the entire trade cycle right from customer order through to the customer paying.

It is also important to consider how else you can improve cashflow. Solutions include:

• negotiate with debtors for quicker payment terms
• effective credit control – can you improve systems or outsource this function
• negotiate longer credit terms with suppliers
• can you reschedule any loan agreements to reduce monthly payments?
• sell any unused assets such as machinery and vehicles you don’t use
• can you sub let and part of your premises?
• can you reduce your wage bill?