Being a business owner and looking for the right finance isn't as straightforward as it once was.
Traditionally owners would simply visit their local bank manager and either the funding was approved or not. Now the options, unless you have a degree in Financial Services Management, are more likely to confuse rather than enlighten. While the local bank remains a common starting point, face-to-face meetings with managers are less common, and funding choices are often limited to the services the bank provides.
Let’s take a simple funding option which continues to grow year on year - Invoice Finance. Most business owners know what ‘Invoice Finance’ is, or do they? What is the difference between invoice discounting or spot factoring and a recourse or non-recourse facility? What is reasonable personal security to be offered to support the funding facility?
How can Invoice Finance contribute to the growth of an organisation?
Here is an example of how Invoice Finance can support a new venture to grow into a multimillion-pound business without ever providing any more security than on the first day of trading.
In the past we sourced all the funding for a company who produced the first ever coloured Vodka. Up until its launch all vodka sold worldwide was a clear liquid. The investor who brought this genius idea to market was sat in a bar in Los Angeles waiting to catch a plane back to the UK and ordered a black coffee and a black Vodka. The barman looked at him astounded and replied, ‘I am sorry Sir but all the vodka is a clear liquid not coloured’. And so, the gem of an idea for Black Vodka was formed.
Arriving back in the UK the investor located a small local distillery in Essex who could produce the product and bottle it.
With the first bottle in hand, the proud owner arrived at our offices produced his samples and asked us to find funding for the business.
He had run out of cash. We negotiated short terms of credit with the distillery, the business owner sold the products to both large and small retailers and an Invoice Finance arrangement funded all the sales worldwide. Eventually the business was sold at a profit of over £6m to the original shareholders.
This is just one example of how thinking outside the box can help business owners find the cash they need to expand and grow.
Traditionally owners would simply visit their local bank manager and either the funding was approved or not. Now the options, unless you have a degree in Financial Services Management, are more likely to confuse rather than enlighten.
How can MHA help?
Invoice Finance is just one alternative to a bank loan, other options include Asset Finance, Property Finance or a Revolving Credit Facility.
At MHA, our Banking & Finance Team make it their mission to know the available funding options, flexible lenders, and competitive rates.
For more information or an initial discussion, please contact us by filling in the form below.
