Invoice Finance For Phoenix Businesses
Compare invoice finance online and have the leading lenders compete for your business. Get the best deal with ABC Finance.
Rated Excellent on Reviews.co.uk
Securing funding for your business can be difficult at the best of times, and for those businesses that have suffered recent credit problems, it can make matters even worse. Although there are often valid reasons for the problems, a number of funders will be unwilling to lend.
Many lenders will frown upon any sort of previous problems, even if they are unrelated to the business they are funding. Where a Director has closed a number of companies in the background, lenders can take a similarly dim view.
In this guide, we will break down the major issues, how we can help and what you should do to get started.
What is a phoenix company?
‘Phoenix company’ is a term used to describe a business which has been started up to continue the trade of another company. The new business is usually used to pick up the activity and order book of a recently liquidated company, with no gap in trading.
They will usually have the same directors and shareholders and will continue to trade with very little disruption to customers. The previous trading company will then usually enter into insolvency proceedings or be dissolved.
What is invoice finance for phoenix businesses?
Invoice finance is a type of business finance that funds the ongoing cashflow requirements of a business.
It allows you to release funds against your unpaid invoices and is designed for businesses that operate on a business to business (B2B) basis on delayed payment terms of 30 days or more.
Invoice finance for phoenix businesses can be broken down further into invoice factoring and invoice discounting.
Some facilities include credit control support, whereas others do not. While credit control support is often convenient, it does mean that your customers will be aware of the facility – as they will receive credit control calls from your lender.
How does it work?
It works as follows:
- Invoice raised – Send your invoice to your customer as you usually would and provide a copy to your funder.
- Funds received – Up to 95% of the value of the invoice is paid to you by your lender within 24 hours.
- Credit control – Depending on the type of facility taken, either your business or your lender chases payment of the invoice.
- Receive the balance – Once the invoice is settled, you receive the balance, minus the agreed cost of finance.
Are there different types to consider?
Yes, there are 3 main types to consider. They are:
- Invoice factoring – Invoice factoring, also known as debt factoring, includes both finance against your sales ledger and full credit control support. For this reason, your customers will be aware of the facility.
- Invoice discounting – Discounting, also known as confidential invoice discounting, as the name suggests, is not flagged to your customers and allows you to retain credit control in-house.
- Selective invoice finance – Selective invoice finance involves the funding of anything from one to all of your invoices, but at your discretion. You can pick and choose the invoices that you would like an advance against.
Why is invoice finance a good option for phoenix businesses?
As the lender is reliant on payment from third-parties, rather than the borrowing entity, funding can be much easier to secure than other types of finance.
Other types of funding, such as business loans and asset finance may be less straightforward, unless you offer significant amounts of security.
What is a pre-pack administration?
A pre-pack administration is a method of liquidating a company in the UK. A pre-pack administration involves the sale of some or all business assets prior to the appointment of an administrator.
The main difference between a pre-pack administration and a conventional administration is the fact that the sale of assets is pre-agreed. The administrator would usually look to negotiate the sale once appointed.
Where pre-pack administration is used to fund a phoenix company, trading will often continue through a new limited company with little to no break.
What is a CVA?
A CVA (Company Voluntary Arrangement) is a debt management tool for insolvent limited companies. It works in much the same way as an IVA (Individual Voluntary Arrangement). It allows the company to pay its creditors over a fixed period. In order to be allowed to enter into a CVA, the company’s creditors must vote to accept the terms.
The terms of the CVA will be defined by an insolvency practitioner, who will calculate a suitable arrangement for all parties. The arrangement will cover the amount of debt to be repaid and the monthly payment.
The insolvency practitioner has one month to complete this task and must send over the proposal to all creditors. To be approved, at least 75% of the company’s creditors must agree. If agreed, the company will be allowed to continue to trade.
Failure to maintain the repayments can result in the liquidation of the company through a winding-up petition, which can be applied for by creditors.
What is the best way to secure invoice finance as a phoenix company?
The best way to secure invoice financing is through the ABC Finance invoice finance comparison tool.
We’ve redesigned the application process to make things easier for the customer and take away the power from lenders.
You simply input your business details and borrowing requirements, and within minutes, lenders start competing for your business.
Each lender has one shot at winning your business by uploading their best possible terms in an effort to secure your facility.
Once you have an offer that you’re happy with, you can take your application forward in a single click. If you require a bit more support and would like help making sense of the offers received, our team of experts are on hand to break things down and help you to make the right choice.
