Increase Prepayment & The Cash Generated by Your Facility
A lot of clients contact us looking to increase prepayment. We can help you do this. However, what most clients really want to do is generate more cash from their facility and this can be done in a number of ways. It is important to remember that prepayment is important. However, that prepayment percentage is applied to the 'eligible book debt'. By increasing the eligible book debt and maximising the prepayment level you can optimise your facility.
Increase prepayment percentages
This can be done in 2 ways:
First, we can approach other lenders on your behalf to explain your requirement in detail. This may offer them more comfort and they may be happy to offer a higher prepayment.
Secondly, we can look at your dilutions levels and work with you to reduce these so that an increased prepayment level is more achievable.
Optimise your facility
At Smart Factoring Quotes we work with clients to optimise their facilities. This means that we minimise the restrictions on the facility so that cash generation is increased. We do this by working with the client and also introducing the right lender.
Let's take a look at what can be done to maximise the cash generated:
Prepayment - some lenders are always 5% off the mark when it comes to prepayment in which case we can introduce a more commercial lender. Others may well be giving you what is a fair prepayment level already. We can look to work with you to reduce what the industry terms 'dilution' with a view to obtaining a higher prepayment level.
Facility Limit - some clients we speak with suffer from a restrictive facility limit. This is the overall limit a lender will be able to lend to. Some smaller lenders are restricted by the amount of money they can lend. Others will avoid increasing a limit above a certain amount as it means submitting the file to another level of underwriting. Some are just restricted by their own lending criteria. Importantly we can assess your situation and work with you to get an increased limit either with your existing lender or an alternative invoice finance provider.
Debtor Limits - are you getting funding against all your debtors to the full amount of your exposure? If not we can look to address this. Some lenders will lend to the exact credit rating of the client, some will offer 3 times that credit rating as a limit, others may offer limits of 10% of the ledger value for each individual debtor. We can work with you to ensure we are getting the best structure for your debtor book.
Concentration Limit - not all lenders insist upon a concentration limit. We have some very flexible solutions that can accomodate even a single debtor. If your funding is restricted by a concentration limit we can assist.
Recourse period - some of our clients have extended terms which cannot be accomodated within the recourse period of some lenders. If the recourse period is restricting your funding speak with us.
If you are frustrated with your existing facility or you want to ensure that a new facility is set up properly from the outset please contact Smart Factoring Quotes today on 0845 863 0738.
