Single debtor invoice finance and factoring

Single debtor invoice finance allows companies to get an immediate advance on selective invoices, but without any of the normal long-term commitments or tie-ins normally associated with traditional financial products. Seasonal fluctuations in cash flows are a defining feature of small and medium sized businesses in the UK. Cash flow volatility is ill-suited to traditional long-term factoring facilities: minimum monthly fees penalise companies in months they do not need to draw down on funds. Additionally traditional factor facilities are not a good fit if only a handful of a company’s debtors delays remittance.

Draw-back of traditional factoring

The non-monetary draw-backs of entering into a whole-turnover factoring facility are well known:

• Loss of control of your credit function
• Overly aggressive chasing of your outstanding invoices which damages client relationships,
• Prevalence of all-asset debentures and personal guarantees as security,
• Exclusion of certain classes of invoices which limits actual funding provided.

However, the bottom line for small business owners is price.

How much is the true cost of a factoring facility?

Optically factors will quote you a funds rate in the region of base rate + 2.5%. Already this can be misleading as many factors use a base rate of 4.0% to 5.0% while their wholesale rate is down at 0.5% currently. Of course, this is only one component part of the total cost of a factoring facility. In addition to a funds rate, factors may charge:

• An arrangement fee,
• A monthly service fee,
• Late payment fees,
• Debtor insurance fees,
• Liquidation fees,
• Audit charge-backs,
• Bank transfer and other administrative fees.

Critically, most facilities are legally binding for 12-18 months.

Single debtor invoice finance and factoring

Single debtor finance or selective invoice discounting is a new alternative to traditional wholesale finance facilities. Single debtor invoice finance facilities provide greater flexibility and enable you to sell a single invoice or bundle of invoices when you need it most, without entering into lengthy and potentially expensive contracts.

Single debtor invoice finance allows faster access to capital. Prospective sellers on the MarketInvoice exchange can typically access capital within 1-2 days of signing up.

MarketInvoice Solution

One of the advantages of Marketinvoice is that unlike conventional invoice discounting or factoring mechanisms, one is not obliged to discount the entire debtor ledger – in fact, one can choose to discount only that which is required to be discounted. This has numerous advantages. For instance, if you sell to a number of large debtors and a number of small debtors, one can sell only the receivables to the large debtors and not discount those to the smaller debtors. This means that there is a significant pricing advantage, not only in terms of the discount offered, but also in terms of the fees charged. Unlike conventional financing mechanisms, you will only be charged for the discounted invoices, not the whole turnover.

MarketInvoice offers selective invoice discounting where there are no personal guarantees, no contracts, no hidden costs or all asset liens and the only obligation is to repurchase your invoice if your customers do not pay. Importantly, using Marketinvoice is completely confidential to a business’ end customer and no notification is necessary. Companies maintain control of their invoice collection procedures and customer relationships.With Marketinvoice you raise working capital on your terms.