Cash flow management is one of the larger challenges that many business face, especially it seems, if the business is a small or medium enterprise.
Most of the business owners turn to their bank for help and support, place their personal houses on the line and manage the cash that way.
There is another way. There is an alternative to placing a mortgage on the family home, especially if the Bank is unable to help the business owner right now.
Lock Finance works with the business with a debtor finance product to help speed up cash flow and release monies from the debtor book.
1.How does Lock Finance fit when a bank is already involved in the business?
All of our clients Bank somewhere. We have a lot of experience working along side the bank to help the business.
Usually we require the bank to release the debtors from the banks security, most hold a GSA or general security agreement over the business and we work with the Bank to ensure we share this. Most of the time the Bank has this for comfort or to secure their lending over specific assets that the business owns. Banks often value the businesses debtors at 50% of their true value for lending, whereas we look at up to 90%.
What could you do with 90% of your debtor book released in cash to you today?
2.What businesses are best suited to debtor finance?
A customer needs to be trading with other businesses, B2B. Unfortunately trading with private customers is not fundable this way.
Preferably that business is growing and has a need for more working capital than their current facilities.
Importers, Wholesalers, manufacturers and recruitment makeup the most of our clients however, if the business has a commercial receivables ledger (you are invoicing other businesses with terms of credit) then generally we can assist with a facility.
3.Why would anyone suggest a Lock Finance facility?
Well really they don’t have to, however, businesses deserve to get access to the right working capital and should explore all the options available to ensure they get the best facility for them.
Firstly a business should ensure everything has been done to improve their cash flow management internally.
Then the business should start with their bank to see how they can help, and if the Bank says no (low equity, low profitability, losses, tax arrears) then Locks can look at still providing a cashflow finance facility.
This ensures the business has enough cash flow to grow and stabilise and achieve its goals.
At competitive interest rates and no need to pledge the family home, debtor finance becomes a real option to consider when looking to finance your business needs.