|
Products
The core products remain Factoring and Invoice Discounting,
but these have been supplemented in the past few years with the
arrival of Stock and Trade Finance products.
Obviously the detail varies from provider to provider but the following
items give some indication as to criteria, costs and operation.
Factoring
- Turnover - new starts upwards, usually at least £50k
- Financial - loss making & neg.net worth considered
- Markets - both UK and exports sales financed
- Debt turn - problem ledgers considered
- Spread - 5/6 live debtors preferred, single debtors considered
- Funding - usually 50-80% of approved debts, can be 90%
- Costs - service fee 0.5-4% , interest charge 2-4% over
bbr
- Bad debts -recourse, client responsible, non-recourse,
factor responsible
- Operation - factor runs sales ledger and collects payment
from customers
Invoice Discounting
- Type - Disclosed, customers aware (DID), Confidential,
customers unaware (CID)
- Turnover - DID - £300k upwards, CID - £500k upwards
- Financial - profitable trading preferred, net worth DID
£10k, CID £50K
- Markets - both UK and export sales financed
- Debt turn - must have good credit control
- Spread - can be more of an issue than with factoring
- Funding - usually 50-80% of approved debts can be 90%
- Costs - service fee 0.2-1.2%, interest charge 1.5-3%
over bbr
- Operation - client runs sales ledger and collects payment
from customers
Stock Finance
- Type - can be stand alone, usually linked to CID facility
- Turnover - minimum £2-5m
- Funding - raw materials 30%, finished goods 60-70%
- Costs - arrangement fee 1-1.5%, interest charge 2-3%
over bbr
- Operation - limits can be fixed or variable, provider
monitors monthly
Trade Finance
- Type - transactional finance to assist exporters and
importers
|