Case Study: Releasing cash to replace invoice financeadmin2020-04-20T11:53:17+01:00
Case Study: Releasing cash to replace invoice finance
Managing cash flow is critical for any business and, for many small businesses across the UK, invoice finance is often a way of smoothing those cash flow cycles. However, there can come a time when invoice finance is no longer suitable – the needs of the business may have changed or the facility may not be flexible enough to accommodate your requirements.
When an existing customer of ours approached us about releasing the equity in their equipment through Asset Refinance to pay off their invoice finance facility we were delighted to be able to help.
The request wasn’t without it’s challenges. Firstly, the business was in a Company Voluntary Arrangement (CVA) having encountered trading difficulties a few years ago. Secondly, the assets we were being asked to refinance were a mixture of new and old vehicles of varying age and condition. Finally, without the invoice finance facility we had to be confident the business had a sustainable cash flow cycle moving forward.
Having discussed the issues with the Director we worked with them to arrange an independent appraisal and valuation of the vehicles to ascertain their true value. Alongside this we worked with the business’ accountant and advisor to understand ongoing cash flow and the company’s ability to both trade and repay the new debt funding.
By taking time to understand the business as a whole – assets, liabilities, cash flow and crucially the people – we were able to refinance the vehicle fleet, pay off the invoice finance facility and provide some additional working capital.