Commercial Finance

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Buisness Club 2017

Capital Raising

In today’s hard economic climate many businesses are constantly in need of additional funding to support their business activity but find their own bank is unwilling to support their funding requests. Unfortunately many banks are now looking for a significant value of asset based security against their lending usually three times the value of the borrowings.

By using all of your company’s existing assets we can provide significant amounts of new capital (and repay existing debt) by refinancing your commercial property, plant and machinery, cars and commercial vehicles, sales invoices, UK and International confirmed orders and finished stock, even if some of the assets are already financed.

Many clients are unaware of the untapped potential of their internal assets as a method of providing additional capital into the business. Look through our cases studies and use the “Availability Calculator” to see the potential new funds that could be available to you.

Case Study One

This engineering business was introduced to us by one of our professional insolvency practitioner partners who had been asked to consider the viability of the company due to creditor pressures and a number of County Court Judgements (CCJ’s).

Upon investigation the practitioner found that the business had a strong asset base, good quality debtors but the cash management of the business was poor.

His opinion was that the business did not need to seek to make an arrangement with their creditors but simply needed to introduce additional capital into the business to clear existing creditors.

The practitioner recommended some management controls to avoid this situation arising again and referred the client to ourselves.

We were able to quickly review the clients’ current creditor position and appraise the asset bank of the business.

As an asset intensive operation the company owned a number of high quality engineering machines which were partially encumbered.

The solution was to introduce new capital into the business by refinancing the existing engineering equipment (and settling of the existing Hire Purchase debt) providing enough cash to repay a large majority of the creditors to date.

To assist with future cashflow a factoring facility was established that realised 96% of the sales ledger immediately, so creating good working capital and at the same time employing the services of the factors credit control department to ensure that all future debt was collected efficiently.

The company has since been able to use the new expanded working capital to make spot purchases of steel at significantly discounted prices and have been able to save 5% on purchases by early settlement of accounts.

Case Study Two

A textile manufacturing company was offered for sale by its parent as it no longer had a “fit” with the rest of the operating business. The existing managers wanted to purchase the business under a Management Buy Out “MBO” but had little funds of their own and asked us to assist.

The purchase price of the business was £1.5Million which included the order book, assets, staff and preferential lease terms for the premises used by the company. The debtor book stood at a little under £1.0M with the working assets valued at £220k. The directors had a maximum investment of £50k available.

By negotiating a bespoke package with one of our Premier Panel funders we were able to provide £1.0M on a confidential invoice discounting scheme, with an additional £200k being provided by the same discounter against the working assets, which after the directors’ investment left a shortfall of £250k.

The client had a firm order book of £390k which was due to be delivered within 12 weeks. We used a specialist trade financier to provide the additional capital required by securing the £250k debt against the order book of the business.

Case Study Three 

The client had a normal turnover of £4 Million but had suffered from declining sales and needed to take corrective action to keep the bank from recalling the existing borrowings. The business had not only seen a decline in sales in the previous trading period but had also written off two substantial bad debts. This had resulted in a financial loss for the company for the first time in its history.

We appraised the existing asset of the business and provided a substantial uplift in the company’s cash availability. By introducing a confidential invoice discounting package the bank overdraft of £150,000 and a term loan of £125,000 (secured against the business premises) were fully repaid. The client also had a further £250,000 of available funds created which was used to upgrade existing manufacturing equipment and invest in a sales and marketing programme to capture new clients. By using this financial product the company not only had a facility that would expand with their future growth and was not “repayable on demand” as with their previous overdraft.

For help & assistance please contact our Commercial Finance team on 01482 213215

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