Changing invoice finance facilities smoothly

The requirement

A manufacturer in the aviation industry was referred to Spark by an FX Partner via Spark Connect to explore invoice finance facilities, as their current facility was up for review. They wished to compare rates and potentially increase the facility size before renewing for another term.

They had a £500,000 facility size and were seeking to increase to £750,000.Half of their suppliers were overseas.

‍

Offerings

Spark introduced two options: one from a banking institution and another from an independent lender.

While the bank provided a more competitive indicative offer, the flexibility of the independent lender made the latter more attractive. However, the business required export insurance, which could affect the lender’s pricing.

The independent lender has a partnership with the British Business Bank and was able to offer a£1,000,000 confidential invoice discounting facility under the RLS Scheme. This increased the available funding and upfront payments, reduced risks, and provided competitive rates, as it is backed by the government.

‍

Outcome

After all checks were completed, the business was able to take the next step and gave notice to terminate their existing facility.

To expedite the process, the lender offered to buy out the remaining two months of the current facility’s notice period.

The business successfully transitioned to the £1,000,000new facility. Since they’ve implemented their preferred cashflow solution, they are now able to explore plant &machinery acquisition.

CID Facilities

Confidential invoice discounting improves cashflow, as the company borrows against the value of its unpaid invoices without disclosing this to its customers.

This facility under the RLS Scheme allows additional funding with reduced risk because the government provides a partial guarantee to the lender.