Although invoice discounting is a great means of freeing up cash against unpaid invoices it is becoming increasingly more difficult to secure an confidential invoice discounting facility. Once upon a time a business had to have been trading for at least 3 years , have at least a £1.0m turnover and have a very strong balance sheet.
In the good old days when there was plenty of cash swilling around the system all the finance companies were competing with each other for business and it is fair to say that the usual criteria for confidential invoice discounting were relaxed somewhat. New start businesses, phoenix businesses and businesses with far from strong trading performances were being offered facilities.
Invoice discounting and in particular confidential invoice discounting is susceptible to fraud and in these difficult times finance companies are reverting back to the more stringent criteria for invoice discounting. Therefore if a business is financially weak, turnover is below a certain level or even credit control systems are weak it is more likely that a business will pushed down the factoring route.
If the business doesn’t quite meet the criteria for confidential invoice discounting it maybe possible to organise a disclosed facility whereby the customer is is responsible for their own credit control. Which ever way you decide to o it is worth shopping around as different finance companies have different criteria. Even better get a decent independent finance broker to do all the hard work.
