How Can You Get An Overpayment?
What is an Overpayment or an Overpayment Facility?
A factor or invoice discounter will provide funding to their client against their outstanding sales ledger (factoring or invoice discounting) according to a set of rules known as the funding formula. This will specify the early payment percentage that will be made available against each invoice.
In some cases, such as an acquisition or a period of high growth, a business may require more finance than the funding formula will generate. Rather than change the funding formula, the provider may agree to provide an overpayment (also known as an overpayment facility) to release further funding.
In some cases, this facility attracts an additional fee and is only available for a short period of time, in other cases the provider may agree to provide an overpayment on an ongoing, semi-permanent basis.
Alternatively, you might want to consider a standalone term loan.
Cash Flow Top-Up Loans
Sometimes these additional payments are called loans, cash flow loans or top-up loans. As an example, we recently received an offer from one of our partners who will allow their clients to go to a 95% initial payment for a period of between 1 week and 6 months. This could be an amount between £5,000 and £250,000. There are no additional fees, other than a daily usage fee against the amount prepaid.
How Can I Get an Overpayment?
Not all factoring and invoice discounting companies operate in the same way.
Some are more prepared to offer overpayments than others and in some cases, the overpayment facility is considered an additional product within the provider's product range. We can provide advice as to which factors and discounters can offer a solution and how their overpayment facility works.
If you already use a particular provider asking for an overpayment may get you what you need. The provider will normally consider their security and make a judgement as to whether they feel the overpayment is warranted and for what period they are prepared to provide it. If you don't get the result that you want we may be able to help you find an alternative provider that will give you the flexibility of an overpayment facility.
If you need specialist advice about how to access overpayments, the amount of funding that can be released and the costs involved please let us know and we will be pleased to help. Call Sean on 03330 113622
