Tag Archives: Bilbus

Site Upgrade – Maintenance

6 Jun

We’ve got some exciting new upgrades to the Bilbus site and will be introducing the latest version of Bilbus on June 7. You won’t be able to use the site for a few hours:

  • UK users:  0530 – 0830 BST, Friday, 7 June
  • US users  1230 – 0330 EDT, Friday, 7 June
  • AUS users: 1430 – 1730 Sydney/Melbourne, Friday, 7 June
  • NZ Users:  1630 – 1930 Auckland, Friday, 7 June

Once we’re done, you’ll see simpler syncing and imports, customizable reminders, easier menus and customizable cash forecasting. We’ll be sending you an update of how we’ve made Bilbus even easier for you but if you have any questions or comments before then, send us a quick note!

Thanks again for signing up to Bilbus. We’re looking forward to simplifying cash flow for you!

The Bilbus Team

Tags:

When You Should Order Invoice Finance on the Funding Menu–Part 2

12 Apr

In part 1 of this two-part post, I talked about the use of invoice finance as a cost effective way for business to fund its credit sales. While invoice finance tends to have ‘sweet spot’ sectors (manufacturing, services) and hard to do areas (construction, hospitality, consulting), the basic suitability is simple: we’ve seen deals go through as long as the invoices due are based the supply of a good or service to another business and have no contingencies (e.g “you weren’t wearing socks when you sent your invoice so we’re not ready to pay”) allowing the buyer to offset, recoup or claw back amounts already paid from current invoices.

In other words, as long as the customer/buyer has no reason (other than you did not perform) to withhold payment, and the lender sees a good chance of recovery, you can get cash against these invoices.  Consumer facing businesses or those with contingencies or milestone payments have had more luck, in my experience, with term loans, lines of credit and even leases. Within the context of less available lending, of course.

Different lenders have different lending needs at different times. I’ve found larger banks and asset lending companies tend to want to work with business grossing at least $2m (or £2m in the UK ) with 2 + years trading history,  whereas smaller entities will look at $500k (or £500k in the UK) in annual sales upwards. Single invoice lenders ( will finance a single invoice or customer and no contract, lock-in period) provide smaller businesses ($250k+ annual sales) with smaller funding amounts. Invoice auctions vary in their parameters, although with different lender pools (often a mix of individuals and investors).

Lender approaches seem to vary considerably, not only in terms of process, responsiveness, pricing and flexibility, but also in how risk is assessed. Some lenders still prefer to finance all your credit sales, others like to do revolving credit limits (like a credit card), and others pick and choose which of your customer invoices they’ll accept. Businesses younger than 2 years can find it difficult to find finance from larger banks and asset lenders but there are factors  and more flexible lenders who offer single invoice/name financings to less established businesses.

So how do you work out if it’s for you? Simple.  Shop around. If you have the time to spare, you can knock on many lender doors yourself, assemble all documents and the information they need to give you an indicative quote, and let them tell you what’s available. Or, if time is precious and you’d rather spend it on sales, marketing, customer services or some well deserved R&R, let technology do the work for you!

imageLenders need to wade through your information to assess your ability to repay the debt, and the type of financing they offer can depend on your own circumstances as well as their own at the time.

So, we’ve seen many businesses get different responses/offers from different lenders with virtually the same information provided.  One business was offered invoice finance by one lender, and a revolving line of credit collateralised by invoices and other assets by another lender.

That’s great for the business! You get a rough map of what’s out there for you, and some hints to show you the way forward. But as you’ve probably heard at your favourite restaurant, “I like it but you should try it and tell us what you think”!

Different needs require different funding. Need cash to cover credit sales? Invoice finance is worth a look. Want to finance fulfilment of an order? Order/trade finance could be the way to go. Have plans to grow the business? A term loan may be more suitable and cost effective. Cash needs change through the year? A revolving line could be the answer. 

Invoice finance can be a cost effective way to fund working capital. The key is being able to compare it to other options available (i.e. “on the menu”) to you at the point in time you need funding.

I was planning to talk briefly about supply chain finance in this post, but think its probably better tackled on its own. In a nutshell, buyer-driven supply chain finance is where you give your customer a discount to pay you earlier than your agreed terms (i.e. 15 days instead of 75).  There has been a fair amount of debate in the UK press about the pros and cons and supply chain finance and we see many businesses have differing views on the prospect of giving their own customers a financial gain for paying them on time. But, more on that another time…

Have any questions on invoice finance? Send us a note.

Bilbus is a cloud based cashflow hub – connecting to accounting platforms, Bilbus helps businesses manage invoicing and collections, forecast cash flow and when finance is needed, arrange commercial funding. A single cash hub to view and manage receivables, payables and borrowings.

Tags: , , , , , , , , , ,

When You Should Order Invoice Finance on the Funding Menu–Part 1

12 Apr

Money comes at a price. The more willing your lender is to take risks, the higher the return expected. That translates to your borrowing costs and what you have to bring to the table. Practically speaking, if your business does not have the trading history or serious collateral needed by a lender, invoices and orders may be your best bet.

Invoices are the key to unlocking lending. Not necessarily financing the invoice(s), but using them to assess/demonstrate ability to pay and include them in any security/collateral package.

Leading up to 2008, bank lending crowded out invoice finance. A relationship banker in a mid-sized bank in the mid-Atlantic area explained that deal size and information requirements made term lending or overdrafts more competitive, noting “ it’s been easier for us to give the business a secured loan than to do all the work needed in an invoice financing”.  Today, with wholesale funding markets (what allowed banks to lend cheaply) contracting, invoice finance’s 300 year+ simplicity can be a good route to funding businesses.

Why? Since banks have less to lend, their risk appetite has gone down even further. Owners guarantees, fixed assets and other collateral become central to their credit decisions.

Invoice finance, while often more expensive than traditional loans and credit lines, makes sense if:

· a business is owed money by other businesses with a better credit standing than its own;

· it sells to other businesses on credit terms longer than 30 days; or

· the business wants to take advantage of credit control services offered by an invoice financier.

If the business is effectively providing vendor finance (i.e. supplying on 60-90 days credit) to its customers, its invoice finance charges are really a cost of sales. Due to its short term nature, I’ve seen most businesses use invoice finance for working capital and short term needs. If needing to finance growth and expansion, a solid business case will yield better priced financing geared towards the expansion project. I’ve very rarely seen businesses refinance expensive debt using invoice finance.

Invoice lenders tend to be less interested in the business’ intended use of funds. Traditional invoice lenders have been, in my experience, primarily focused on whether they will get paid. They look at the payment history of the buyer and its credit standing in addition to the financial standing of the borrower. If financing on a non-recourse basis (i.e. if the debtor/customer defaults, the lender has no recourse to the borrower), the standing of the borrower concerns them less.

imageI see more cases  where the borrower remains ‘on the hook’ (i.e. if the customer does not pay an invoice, the borrower has to repay any advances taken from the lender) and thus, the business borrower’s credit circumstances are carefully assessed.   Unless a ‘true sale’ has taken place, lenders, purchasers, even auctions can claim back advances against an invoice if it remains unpaid.

There seems to be a lot of confusion among businesses and their advisors about whether (and when) invoice finance is suitable. Bottom line is that if done right, invoice finance can be an effective part of your overall business’ financing.

In the next part of this article, I’ll talk about some suitable circumstances and also touch upon supply chain finance.

 

Bilbus is a cloud based cashflow hub – connecting to accounting platforms, Bilbus helps businesses manage invoicing and collections, forecast cash flow and when finance is needed, arrange commercial funding. A single cash hub to view and manage receivables, payables and borrowings.

Tags: , , , , , , , , , , , , , ,

← Older Entries

%d bloggers like this: