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• 15 Jul

  Second Business Acquistion Completed By A Customer

  

  One of our existing clients has utilised a further recourse factoring facility in order to make their second business acquisition, in short succession.

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  Second Business Acquisition Boosts Growth

  They had already completed an initial acquisition of a business within their trading sector. They utilise an invoice finance facility in respect of the sales ledger of that business, in order to release more liquidity into the business. Now, they have made a further acquisition of another organisation, within their trading sector, which is double the size of the initial purchase. This will have a significant effect on their turnover, and boost their growth substantially.

  Using Factoring To Support Acquisitive Businesses

  At a time when the UK economy may be contracting, acquiring a competitor, in order to achieve step change levels of growth can be a good way of expanding your business. Factoring can be a great enabler for any companies that are on the acquisition trail.

  Invoice finance can assist acquisitive businesses in a number of ways. Firstly, the acquiring business can leverage their own book debts in order to release cash. Secondly, the book debts of the target company can be funded in order to either assist with the purchase price, meet deferred payment requirements, or just to improve the working capital position of the business.

  Funding And Credit Control Via Recourse Factoring

  Recourse factoring works by releasing a proportion of the value of the unpaid credit invoices owed by your debtors. It is therefore cash that you already own rather than debt that you are taking on. The greater the value of outstanding invoices, the more cash that can be released. The remaining balance of the invoices, less the fee for utilising the service, is passed on to the client company when the customers pay. This allows clients to grant credit to their customers, whilst benefiting from immediate payment of the majority of the value of each sale.

  The added benefit with a factoring facility is that it includes a credit control service. In the case of the independent factoring company that we introduced to this particular client, that is a comprehensive service whereby the client will not need to retain their own credit control staff in order to either undertake the debt collection or support the collection efforts of an invoice finance company. In some cases, factoring does not include such a comprehensive service, it varies between different providers, so you need to be cautious about which factoring company you select. We would be happy to assist anyone else that up is considering a business acquisition, and needs to arrange some finance in order to assist with that purchase.

  By Glenn Blackman