Case Study Confidential Invoice Discounting CID For A 3 Million Turnover Business
This case study demonstrates how FundInvoice were recently able to help a business turning over £3 million per annum find a Confidential Invoice Discounting facility to drastically improve their business cash flow. The business had an overdraft facility from a major bank but it was not sufficient to meet their working capital requirements.
More Cash Released
This is often the case as receivables financing tends to release more cash than a bank overdraft when the trade receivables are the primary security. Additionally, receivables finance normally increases funding levels as turnover increases whereas a bank overdraft will tend to be a fixed amount that needs to be renegotiated.
Bank Overdraft versus Confidential Invoice Discounting
The biggest issue with bank overdraft is that it rarely grows in line with the growth of a business. Often the amount of an overdraft is normally a finite value based upon the value of the security that the bank holds. However, the funding from invoice discounting will grow as the turnover of the business grows. This is because it is directly connected to the value of the sales invoices that the business raises, rather than the assets that the business owns.
For each sales invoice that is raised, an agreed percentage of funding will be immediately released. The more invoices the business raises, the more funding gets released to the business. Loans and overdrafts do not normally work in the same way.
Invoicing And Discounting For Cash
Confidential Invoice Discounting was able to deliver an improved level of working capital to this medium-sized business and the facility was still provided by a major UK bank, giving them peace of mind about their funder. The new facility means that as soon as they make sales they are invoicing and discounting those receivables immediately unlocking cash.
