Working Capital

What is it?

 

 

  • Need Funds now, not in three month?

  • Fed up chasing your clients for payment?

  • Need funding to acquire or upgrade equipment?

 

 

As a company grows, it starts to consume a lot of cash in the day to day operations of the business that has nothing to do with its profits or losses. This type of cash requirement is called working capital.

 

 

Working capital is the finance that businesses need for their day-to-day trading operations.

 

 

All businesses require working capital, but sometimes they are unable to access the cash that they need because they have to wait for large invoices to be paid – sometimes for up to 90 days.

There are several ways businesses can access working capital, from banks by way of overdraft or short term loan, or from finance institutions or other firms by way of asset based finance such as invoice financing, leasing, hire purchase or refinancing. Here we will focus on how asset based financing works and how it can help meet your working capital needs. We also list the providers of this type of funding.

Case Studies - How other people did it!
Marketing Fashion LTD
Turnover=£100+ 
Distributor of Bespoke fashion 
Millen Drylining
Turnover=£3.2 Million
Construction
Stopford Projects
Turnover: £5million
project management
Working Capital - Asset Based Finance

 

Invoice Financing - How can it help a business?

In essence, invoice financing allows you to access funds you are due without waiting for your clients or customers to pay up. In the short term, it can be a great way out of a cash flow crisis.

And in the longer term, it can be a useful tool to ensure things keep ticking along nicely even when clients fail to pay on time.

 

How does it work?

Invoice Financing is a form of short-term borrowing often used to improve a company's working capital and cash flow position.

Invoice finance allows a business to draw money against its sales invoices before the customer has actually paid. To do this, the business borrows a percentage (up to 90%) of the value of its sales ledger from a finance company, effectively using the unpaid sales invoices as collateral for the borrowing. So your business has instant access to the money your customers owe you.

You remain responsible for collecting the invoice payments, meaning your customer is unaware of the financing agreement. The finance company will apply interest charges and a fee for the service.

 

 

What are the advantages?
  • Your business will have immediate and continuous access to working capital.

  • Allows you to maintain control of your own debt collection and customer relationships.

  • Gives you access to cash that grows in line with your turnover.

 

 

Leasing – How can it help a business?

Leasing allows you the full use and benefits of an asset but without the potential burdens of ownership and with minimal capital outlay.

The financing period can be set to a term that suits your business, financing is generally available over a one to five year period, but can be longer if appropriate.

Repayments can be flexible and set to match your cash flow, thereby reducing working capital requirements.

 

 

How does it work?

Broadly put, a lease agreement is a contract between two parties, the lessor (owner of the asset) and the lessee (User). The lessor is the legal owner of the asset, the lessee obtains the right to use the asset in return for lease payments. At the end of the primary lease period you can return the asset or continue to use it through a secondary lease agreement. Leasing can be utilised for most assets and is commonly used for commercial vehicles, office equipment, plant & machinery.

 

 

What are the advantages?
  • Payment schedules to match the income generated from the asset without putting your cash flow under pressure.

  • Flexible lease periods.

  • Minimises capital outlay.

 

 

Hire Purchase – How can it help a business?

Hire purchase is quite similar to leasing in that it gives full use and benefits of an asset but without the potential burdens of ownership and with minimal capital outlay.

The only significant difference between hire purchase and lease finance is that you can acquire ownership of the asset at the end of the hire purchase agreement period. This is generally by way of one additional payment.

 

How does it work?

Hire purchase is an agreement whereby a business hires goods for a period of time by paying instalments, and can own the goods at the end of the agreement if all instalments are paid.

Hire purchase agreements usually last between two and five years. Under a hire purchase agreement, the business does not actually own the goods until the last instalment is paid, although the business has full use of the goods throughout the repayment period.

Hire purchase agreements can be held with banks, building societies and finance companies.

 

What are the advantages?
  • Set monthly repayments - allows the business to easily budget over the term.

  • The business can spread the cost over the useful life of the asset – keep capital outlay to a minimum.

  • The business can acquire ownership of the goods at the end of the hire purchase agreement

 

 

 

Refinancing an asset – How can it help a business?

From time to time, a business may need to raise cash quickly. Whether you simply need additional working capital or you want to fund a deposit on a new piece of equipment, refinancing can release the funds you need.

Assets can be refinanced to reduce the monthly repayments on an existing finance arrangement, either by getting a better deal elsewhere or by spreading repayments over a longer term.

 

 

How does it work?

Put in very simple terms, asset refinance can be likened to remortgaging a house in so far as equity is released against the current value of an item. It typically involves refinancing assets which are either owned by the business outright, or subject to an existing finance agreement.

The business can sell an asset to a leasing company for its current value and then lease it back over a set amount of time for a regular rental repayment.

Assets can be refinanced to reduce the monthly repayments on an existing finance arrangement, either by getting a better deal elsewhere or by spreading repayments over a longer term.

 

What are the advantages?
  • Can boost cashflow by providing an injection of capital into the business.

  • Reduce existing monthly repayments.

  • Raise capital to invest in the purchase of other assets not suitable for standard Asset Finance agreements.

WORKING CAPITAL

 

Bank of Ireland Commercial Finance

Do you have debtors? Can your debtors be slow to pay?

If the majority of your debtors paid you tomorrow, would you have use for the cash?

Invoice Finance enables you to raise working capital by converting trade debts into cash. Under this facility a company can access funds of up to 85% of approved invoices usually within 24 hours. Cash is continually delivered to your business, increasing with your sales, without the burden of loan repayments.

Celtic Invoice Discounting is the largest independent invoice discounting company in the Republic of Ireland specialising in providing cash-flow solutions for small, medium and start-up businesses. As the only provider of transactional-based invoice finance in the Republic of Ireland, Celtic Invoice Discounting specialises in releasing the working capital tied up in the accounts receivables of a business.

Celtic Invoicing
Close Brothers Commercial Finance

Invoice finance is one of the fastest growing business finance solutions in the UK & Ireland. You effectively sell us your unpaid invoices. We pay you up to 85% of their value the same day you raise them, so you have instant access to the money your customers owe you. Then, when the debt is collected, we pay you the balance less an agreed fee.

 

Our team of specialists will work to create a funding solution that meets the needs of your business. We offer a range of products including invoice discounting and factoring which can be tailored to suit your requirements.

AIB Invoice Finance

What is Invoice Finance?

Invoice Finance is an asset – based debtor finance product, that provides an upfront release of cash tied up in trade debts. Access up to 85% of invoiced debt. Our Invoice Finance service, provided by AIB Commercial Finance Limited, may be the answer to your working capital needs. Get immediate access of up to 85% of invoiced debt without affecting your customer relationship.

 

BIBBY FINANCIAL SERVICES IRELAND

Bibby Financial Services Ireland is part of the Bibby Line Group, the largest independent provider of cash flow finance globally which provides €1billion funding to over 7,000 SMEs across 47 international offices in 15 countries. Bibby provides a wide range of flexible funding solutions that help Irish businesses grow and expand. The company supports SMEs by giving them access to cash tied up in invoices through invoice financing. Bibby works with clients, both new start-ups and established businesses, across all business sectors and supports almost 5,000 jobs in the Irish economy. The company employs 30 people in Ireland and is based in Sandyford, Dublin.

Aztec Money

Aztec Money is an open access global marketplace offering Export Trade Finance that YOU control. The first marketplace for export trade receivables and invoices with immediate access to cash on the terms YOU choose. Aztec Money is the easiest, fastest and most secure way to access financing for your business without using Factoring, Bank loans or Letter-of-Credit. Simply register and start selling your invoices on terms you choose and watch bidders compete to buy your invoices. We support your business globally for all goods and services invoices. Your Business. Your Exports. Your Aztec Money.

Ulster Bank Invoice Finance

Invoice Finance allows your company to raise working capital by converting your trade debts into cash. It is a confidential facility and as far as your customers are concerned, everything works just as it did before. You receive up to 90% of the value of invoices once you notify us of them electronically using our FacFlow™ system. FacFlow™ is easy to use and reduces the administration associated with an Invoice Finance Facility by allowing you to notify sales and to access funding.

  • Facebook Social Icon
  • Twitter Social Icon
  • LinkedIn Social Icon

Call

T: +353 1 275 1632