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• 27 Jan

  You Only Need Orders To Raise Finance

  

  Finance can seem very hard to find when your business doesn't have a strong set of financial accounts. This was the situation that one of our clients had found themselves in. However, if you know where to look, you only need orders to raise finance.

  You Only Need Orders To Raise Finance

  Our client was a manufacturing company that was working on a substantial government project. They had managed to secure some loan funding so they geared up to finance that work. Things were looking good for them. Then, the government decided to remove support for that project, and the situation was further exacerbated when the COVID-19 pandemic hit shortly afterwards.

  Finance Unavailable Due To A Negative Net Worth

  The company managed to survive these events, but they were left with a set of financial accounts showing a balance sheet with a substantial negative net worth and a lot of long-term debt. Post-Covid, the company were able to secure two large orders worth around £800K. However, other funders were unwilling to provide further working capital finance due to the weak balance sheet.

  Working Capital Finance For Large Orders

  The client was referred to us by one of the funders who had been unable to help, and we set about searching the market to secure them some working capital finance so they could deliver against these large orders.

  CHOCs Invoice Financing

  We found them a CHOCs facility with an independent invoice finance company that was prepared to provide finance. CHOCs means "Customer Handles Own Collections". This meant that our client would receive prepayments against their sales invoices and still be able to manage their own credit control.

  The funder that we introduced took the time to understand the contracts and get to grips with the nature of the debts owed to our client. This gave the funder the comfort of being able to provide invoice financing against these large orders. So, in the end, a poor balance sheet could be overlooked and our client was able to raise the required finance on the basis that they had substantial orders.

  By Glenn Blackman