SME cash flow - how to save it and raise it - including single invoice finance - part I

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

​Invoice finance
Sell your invoices so get the cash in them sooner. There is a fee for this but compared to waiting 60 days or more, this is worthwhile for many SMEs.  Single invoices can be sold for temporary cash shortages.

Single invoice finance is a recent form of factoring or invoice discounting.  For example, Cash for Invoices Limited offers single invoice finance service 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.

Rent, don’t buy
Before incurring capital expenditure or other significant costs, consider renting the item to save the high capital outlay

Reduce overheads
Search your business areas for expenditures that do not need to be incurred or not as high as before. 

Creditors
See if you can delay paying your creditors. This must be handled with care and consideration. Keep an open dialogue because there might be occasions when they will allow an extension.

Stock
Do you really need so much stock? 

Debtor discounts
It can be better to get the cash sooner even if you have to offer a discount to get the debtor to pay. You will also reduce the risk of not getting the payment at all or late.

Debtor management
Do you need to install an effective credit management system that gets cash owed by your debtors on time?

Grants
Are you are eligible?

Energy costs and renewable energy
Undertake a thorough review of your energy usage to identify areas and practices where energy can be saved.

Move to a lower tariff, or move to a cheaper type of energy. Do your own homework before you install that wind turbine or solar panel on the roof.

Currency risk
For overseas sales, invoice in GBP to avoid losses from currency movements. If that is not possible, consider currency insurance from a bank. Take independent advice beforehand to ensure you understand the insurance terms.   Brexit triggered a massive decline in sterling that is likely to have significantly raised costs for many unprotected businesses

Cashflow forecasting
Start to forecast your expenditures and see whether you will have enough income to meet them.  Being proactive is often less costly than reacting at short notice to cash emergencies. 

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.