Do you have strong opinions about invoice finance products? Many accountants we speak to at Funding Options are wary of invoice finance options. Some have heard horror stories, some have had poor experiences in the past, and some confess that they just don’t know enough about these products to recommend them with confidence. In this hour-long webinar Kate Sharp of the Asset Based Finance Association (ABFA) joined us to talk through the myths and facts surrounding invoice finance options, and to answer your questions.

1. The problem with factoring:
ABFA CEO, Kate Sharp, on how the industry
is changing

2. Bailey Kursar, Funding Options
• Part of a team that helps businesses access
a range of lenders with one application
• ICAEW Member Rewards partner
• Find out more at www.fundingoptions.com
or call 0845 366 4199

3. Kate Sharp, CEO of ABFA
• Leads the trade body for invoice finance &
asset based lending industry
• Represents 95% of Asset Based Financiers in
the UK
• Find out more at
www.abfa.org.uk/accountants

4. What are the biggest issues facing your business clients?
?

5. What are the biggest issues facing your business clients?
Poor cash flow
Finding new sales
prospects
Getting finance
Keeping clients
happy
Asking clients to pay
on time

6. What are the biggest issues facing your business clients?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lack of cash Bad debt Declining sales Poor credit
management
Source: Financial Marketing Limited, survey of 2,063 accountants

7. What are the biggest issues facing your business clients?
78%
of accountants said clients have
reported an increase in late
payments in the last 12 months

8. What are the biggest issues facing your business clients?
UK businesses are settling outstanding debts on
average...
+25
days beyond agreed
terms
Source: 2012 late payment index from Experian

9. What are the biggest issues facing your business clients?
80%
stated that the biggest challenge
their clients face today is the
removal or restriction of traditional
forms of finance

10. Getting finance for business clients

11. Getting finance for business clients
 Improves cash flow
 Unlocks cash and grows with turnover
 Maintain healthy client relationships
 Free up resource in the business
 Access to specialist experts
 Extensive credit history not required

12. Invoice finance: the facts
UK and Ireland
businesses using
invoice and asset
based finance
43,000

13. of clients have turnovers
under £6,000,000
80% & around one third have
turnovers under £500k
Invoice finance: the facts

14. total funding advanced to clients
by ABFA members in 2012
£16.7 billion
Invoice finance: the facts

15. Invoice finance: the facts
 Lender takes control of sales ledger
 Client no longer has burden of credit
control
 Customers will be aware of the
facility
 A readily available form of finance

16. Invoice finance: the facts
 Credit control managed by the
business
 Generally less expensive than
factoring
 Customers may not need to know
about the finance facility
 A trust account is set up so that
money can be transferred between the
business and the lender

17. How does
fit in?

18. How does ABFA fit in?
Asset based finance is not
currently subject to statutory
regulation in the UK or the
Republic of Ireland
A self-regulatory
framework, introduced by
ABFA, covers their members

19. How does ABFA fit in?

20. How does ABFA fit in?
Complaints are handled by the lender
in the first instance
After 12 weeks, or when the lender
issues a „Deadlock‟ letter, the
complainant can then register the
complaint with ABFA
ABFA has commissioned the
Ombudsman Service to provide the
independent complaints process for
the industry

21. Addressing the assumptions about invoice finance
?

22. Addressing the assumptions about invoice finance
It’s way too
expensive
Creates rifts between
clients and customers
Too much paperwork
Contracts lock clients
in for too long
It’s a ‘lender of last
resort’

23. Addressing the assumptions about invoice finance
It’s way too
expensive
The cost is competitive compared to bank loans and
other products
Businesses using invoice finance benefit from savings
on costly overheads, such as a credit control team
Better cash flow results in fewer bank charges

24. Addressing the assumptions about invoice finance
Contracts lock clients
in for too long
For the right business, lenders are willing to be more
flexible
There are more and more products coming onto the
market, all with different terms

25. Addressing the assumptions about invoice finance
It’s a ‘lender of last
resort’
Lending criteria are more flexible
than bank loans
Invoice finance is designed for
growing businesses, not those in
trouble

26. Addressing the assumptions about invoice finance
Too much paperwork
Some products are more suited to businesses with a
dedicated finance manager
Some lenders now manage accounts online and make
reports on client sales ledgers available

27. Addressing the assumptions about invoice finance
Creates rifts between
clients and customers
An invoice financier may provide
a dedicated credit controller who
effectively becomes part of your
team
Some invoice discounting
products remain confidential, so
customers aren‟t even aware of
the facility

28. A one minute case study
Established in 1996 in Leeds
Boasts 10 top health and supplement brands as part of a
growing portfolio
Recommended by their accountant, invoice finance has
meant they can pursue an international growth strategy.
Their substantial facility finances their UK invoicing and
their export debt.
“We have been delighted with the flexibility that invoice
discounting provides” (Philip Bryne, MD)
BR Pharmaceuticals

29. ?

30. www.abfa.org.uk/accountants