On the face of it one invoice discounting is the same as another invoice discounting company. For the majority of businesses this probably the case. However as mentioned on previous blogs all finance companies have their own sweet spots and this includes the total exposure they will go to or one company or in other words the total amount of funds out. If you find that your invoice discounting or factoring company is restricting your overall credit limit then t might be time to seek an alternative view point. As one of the UK’s leading invoice finance brokers we believe we are well placed and qualified to help you with such matters.
There are usually a number of different reasons why a finance company will restrict your overall limit. It may be because your business has had a dip in performance and they wish to monitor your activities more closely. The banks in particular will get nervous in this situation and as such try and reduce their overall exposure. At a time when your business needs cash most this can be massively inconvenient and can possibly make the trading situation worse.
It may be that you have beached your covenants. The most common being pre invoicing or misappropriating cash. More often and not these more serious breaches result in being given a red card. When faced with a potential new funder it is always best policy to come clean and explain the reasoning behind your actions. All factoring and invoice discounting companies will take a reference and any misdemeanours will always be found out.
Or it could be that the finance company is uncomfortable with the overall exposure not because there is anything wrong with your business but because the funding limit is getting too big for that particular business. In this situation an amicable parting ways is usually the best option. Even some of the high street banks get nervous with some of their larger clients and as such some professional advice and help will enable you to find the most appropriate funding partner.
Tags: Factoring, invoice discounting
