- Client: UK power generation and electrical installation business
- Facility: Circa £1 million
- Advance Rate: 60%+ per invoice
- Interest Rate: 3% + base rate on drawn funds
Enness was approached by a UK power generation company specialising in electrical installation and design that was experiencing significant gaps within its working capital cycle. The business needed additional liquidity to bridge the period between completing work and receiving payment from customers.
The nature of the company’s contracts made arranging suitable corporate finance particularly challenging. The business received both stage payments and payments under contractual arrangements, which meant that its invoices did not always fit the standard criteria used by traditional invoice finance providers.
The company also operated within a sector that many lenders consider higher risk, with construction-related businesses often facing additional scrutiny when seeking working capital facilities. Enness therefore needed to identify a lender that understood the company’s trading model and was comfortable providing finance against its receivables.
After assessing the business and its working capital requirements, Enness identified a specialist lender able to provide an invoice finance facility structured around the company’s specific payment cycle.
The facility provided a limit of approximately £1 million, with an advance rate of more than 60% against eligible invoices. Interest was charged at 3% plus base rate on drawn funds, meaning the company could access additional liquidity as required rather than paying interest on the full facility limit when funds were not being used.
The structure provided the business with greater control over its cash flow, allowing it to access funds against outstanding invoices while waiting for customers to make payment. This helped reduce the working capital pressure created by the timing differences between completing projects, receiving stage payments and ultimately collecting contractual revenues.
The case demonstrates the importance of looking beyond standard lending criteria when arranging working capital finance for businesses operating in specialist sectors. Invoice finance can provide a useful source of liquidity where a business has a strong receivables book but experiences a significant gap between delivering its services and receiving payment.
Enness’ access to a broad network of specialist lenders allowed us to identify a provider that was comfortable with the company’s industry, payment structure and working capital requirements. If your business is experiencing cash flow gaps between invoicing and receiving payment, speak to a mortgage specialist to discuss your requirements.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, receivables assessment and lender criteria. Terms and availability will vary depending on individual circumstances, business performance and the proposed facility.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
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