- What is invoice finance and how does it work?
Invoice finance is also known as Factoring, Invoice Discounting, Receivables Finance or Sales Ledger Finance.
It works such that the company effectively sells its unpaid invoices, to the finance provider which, in return, advances normally around 80% of the outstanding gross invoice value to the client with the remainder being paid (less charges) once the customer pays.
- How much money will you advance?
The amount advanced will depend upon the nature of your business but can be up to 90% of the gross invoice value. The norm is usually around 80%. We might be slightly concerned with your margins if you always needed 90%!
- What does a facility cost?
We have made a conscious decision to keep our fee structure simple and transparent, however, each facility is costed individually.
There are generally two forms of charge: the discount margin (interest charged on funds drawn down) and the service fee. Like an overdraft, the discount margin is charged at a percentage above the Bank of England base rate. The service fee is a fixed monthly fee based on the actual cost of running your account which is determined by the size and type of facility you have.
- Is my company suitable for invoice finance?
Invoice Finance is well suited to companies selling “completed” products and/or services, to other businesses on open account credit terms of up to 120 days generally. It is not particularly well suited to companies who sell on complicated contractual or interim payment terms but give us a call and we can tell you fairly quickly if we can help.
- How long does it take to set up a facility?
This can vary depending on the type and nature of the facility required but we will work to your timescales. Since we have short lines of communication our credit process is very quick and we have been able to turnaround credit decisions the same day. We have been known to have facilities up and running inside 3 days of meeting a prospective Client but the norm is a couple of weeks or so.
- Do you need to tell our customers?
We are required to advise your customers if you have a disclosed facility or utilise our credit management services. We will not advise your customers if you have a confidential facility with us unless you seriously breach the terms of your facility and even then we will be discussing the options with you generally.
- How quickly will funds be available to us after an invoice is raised?
Funds will be available for you to draw down within 24 hours of the invoice being received by Gener8 Finance. In some cases we can advance funds on the same day invoices are received.
- How long are we required to commit to a facility with Gener8 Finance?
We do not believe we need to tie our clients in to long term contracts. Generally the initial contract will be for 12 months to give you peace of mind that the facility is here to stay but we can be flexible on contract terms should your business needs dictate such.
We always give a 3 month service guarantee initially when you join us such that should we fail to deliver and you wish to leave (it’s not happened yet!) no onerous contracts or fees would be due assuming you are able to repay any borrowings to us in a timely manner and indeed you may qualify for a refund.
We believe our staff and services levels will (and do) “gener8” client loyalty such that you will want to stay and hopefully recommend other new clients to us. Onerous contracts do not create brand loyalty in our view.
- What exactly does credit management mean?
Credit Management is the process of managing the collection and payment of outstanding invoices whether this is from all customers or selective collections.
This process is typically undertaken by Gener8 from the point at when the invoice is issued to your customer with the primary objective being to reduce and ultimately avoid late or non-payment.
Credit Management should not be confused with debt collection which only deals with individual debts at the point which they become seriously overdue. Gener8 does also assist with this process as well should it be necessary.
- What sorts of businesses do Gener8 provide finance to?
Gener8 Finance does not specify particular types of companies it prefers to work with and takes each potential client on its individual merit. However it does focus on providing facilities generally up to £500,000 so it is for Companies turning over less than £5 million.
We do, however, have some particular areas of expertise that differ to other providers in the market. We are very happy, for example, to work with start up businesses and businesses in turnaround situations as well as more established businesses.
- What are the different types of facilities?
Factoring and invoice discounting are the two terms most commonly used to describe traditional invoice finance services. At Gener8 Finance, we adopt an open approach to structuring a facility and as such we use the terms Confidential or Disclosed Receivables Finance and Management to avoid any preconceptions. Receivables Finance being the worldwide generic description for all invoice finance services.
- Can we determine the way in which you manage our customer collections?
Absolutely. It is important that we protect and enhance your valued customer relationships so we will agree with you from the outset how this is best achieved from a collections perspective. Every customer can be treated differently if required. We will then continue to review and suggest ways in which your debt turn could be improved.