SME cashflow - how to save it or raise it - including using single invoice finance - part II

In this post I will summarise some more methods SMEs can use to raise cash. or to save cash, including the use of single invoice finance.

​Sale and leaseback
If your company owns valuable assets such as buildings, machinery, vehicles, then consider selling to release their cash value and then lease them back over time. The cash can be used in the business for essential items – such as paying VAT, salaries, and buying stock for an order.

Retail bond 
A retail bond is a form of debt and can be for 1 year to over 5 years to maturity. It is not listed and there is no prospectus so costs are substantially lower (though still significant) than the bonds issued by the big companies.

There’s no guarantee how much you will raise but it has proven a successful source for SMEs and it helps to market their brand and products.  Unihousing, a Birmingham, property developer, issued a retail bond that I was a consultant on, raised over £800,000 in October 2015.   At the time I said:

“This is a great achievement for Unihousing – designing a bond that has successfully tapped new corporate and retail investor bases to fund modern student build-to-let properties.  The bond structure provides flexibility and an attractive return with substantial security.  We now have a great platform to launch further bonds for investors to invest in more of Unihousing’s student build-to-let projects.”

Retail share offer
Instead of a bond, shares can be offered also, though these can dilute your ownership in the business, but to avoid this, preference shares paying a fixed dividend and with no voting rights might be a solution.

Joint venture
In return for funds, you give up a share of your profits to your joint-venture partner

Friends and Family
Invite them to become shareholders or lenders in your business, but beware, relationships can become strained if they want a say in how your business is run.

In part II I will summarise more methods, including single invoice finance - a recent form of factoring.  For example, Cash for Invoices Limited offers single invoice finance that has a number of key differences to conventional factoring and invoice discounting facilities offered by banks: It does not force the SME into selling all its sales ledger, it can sell just one.  There is no facility so no ongoing fees and arrangement fee.  No security is required.  All that is required is one fee plus a refundable retention (paid to the SME when the debtor pays the invoice.).   It is simple, quick, and transparent.  For details of Cash for Invoices Limited's single invoice finance service, click here.

What is single invoice finance?
Cash for Invoices Limited offers single invoice finance (sometimes called spot factoring or selective invoice finance)  - a type of debt factoring that has key advantages over conventional debt factoring and invoice finance:

• NO   security.  No debenture or personal guarantee is provided by the invoice seller.  This makes the funding process less complicated, less expensive, and quicker to complete for the seller
• NO   commitment to sell an invoice. The seller has no obligation to sell its entire sales ledger to the funder.  The seller might be flush with cash at times yet with debt factoring it is forced to take funds from the factoring company, and pay associated costs of the facility.  This is inefficient and undesirable.  Single invoice finance from Cash for Invoices Limited requires no commitment so is far more efficient as a source of funds - used only when the seller wants funding.  Because there is no ongoing funding, associated costs are avoided.
• Almost all types   of businesses eligible.  Cash for Invoices Limited is available for many types of organisation.  In addition to limited companies, this includes LLPs, charities, social enterprises and academic institutions.  Single invoice finance from Cash for Invoices Limited opens up a new source of alternative finance for these organisations that might have found it difficult to find funding from other sources.
• Sell just one   invoice.  Since no facility is set up and no commitment is required to sell its entire sales ledger, the seller may sell just one invoice, and whenever it chooses.  With single invoice finance from Cash for Invoices Limited, the seller is in control of funding not the factoring company or bank lender.
• One   fee only  Since no facility is created with single invoice finance from Cash for Invoices Limited, there are no ongoing costs of financing nor none of the associated set up or termination costs
• No recourse   (beyond retention) if the invoice debtor defaults  If the debtor fails to pay on time, some factoring companies sell the invoice back to the seller and demand a return of money it gave to purchase the invoice.  Once an invoice, Cash for Invoices Limited retains credit risk
• Credit protection included   - some funders add a charge if the seller wants to completely transfer the risk of default by the debtor.  Single invoice finance from Cash for Invoices Limited does not charge extra for credit protection.

To find out more about Cash for Invoices Limited's single invoice finance service contact Cash for Invoices Limited or call 0208 987 0429.  Cash for Invoices Limited will consider invoices sold by businesses (or their customers) located in Ealing, Hounslow, Hammersmith, Richmond, Kingston, Harrow, Acton, Brentford, Chelsea, Kensington, Holland Park, Barnet, and the north, south, centre, and east of London, plus other regions of England, Wales, and Scotland, and overseas.