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• 29 Apr

  How To Calculate Funding Released With Invoice Finance

  Calculating the level of funding that will be released by invoice finance is not always as simple as multiplying the value if your sales ledger by the initial payment percentage or early payment percentage.

  There are other restrictions that you may encounter including:
  

  
  
  • Prime Debtor Restriction - typically a percentage that limits the level of funding against one or in some cases several customers that represent a large percentage of your sales ledger
  
  
  • Payment Ceiling or Payment Limit - the maximum value of funding that you can have at any time
  
  
  • Recourse Period - the period after which invoices are no longer eligible for funding
  
  
  • Funding Limits - the maximum value of fundable invoices for a particular debtor
  
  
  • Unapproved, Disapproved or Ineligible - certain invoices or debtors may be flagged as unapproved for funding
  
  
  • Retentions - amounts that are withheld from your availability e.g. whilst awaiting your reconciliation
  
  

  
  You need to account for all of the above possible restrictions when calculating the level of funding that you will get from invoice finance.

  If you are being restricted by any of the above our advisers may be able to find you an invoice finance company that offers a facility without that restriction.

  By Glenn Blackman