Arranging Invoice Finance to Provide this Business with a Much-Needed Cashflow Injection

• Facility: Circa £250k
• Term: 12 months
• Advance Rate: 80% against eligible invoices
• Rate: 2.5% over Bank of England Base Rate
• Security: Combined strategies

Enness was approached by a business that had recently acquired a competing company without taking on additional debt or selling equity. The acquisition had required a significant commitment of the company’s existing resources, leaving the business looking for additional liquidity to support its next stage of growth.

Following the acquisition, the newly enlarged business was undergoing a strategic change that required further investment. While the underlying business remained strong, the use of existing company resources had placed additional pressure on its working capital position. The client therefore approached Enness to explore ways of raising funds without disrupting its wider business strategy.

During a detailed review of the company’s financial position, Enness identified a significant strength within the business: its receivables book. Rather than relying solely on traditional forms of business borrowing, we explored whether the company’s outstanding invoices could be used to provide additional liquidity.

Enness approached a select group of specialist lenders with an appetite to provide invoice finance against a debtor book containing the type of counterparties involved in the business. We worked through the structure of invoice finance with the client, addressing their questions and assessing how the facility could work alongside their existing operations.

Following negotiations, Enness secured a facility of approximately £250k over a 12-month term. The structure provided an advance rate of 80% against eligible invoices, with pricing at 2.5% over the Bank of England Base Rate. The facility incorporated a combined security strategy designed around the client’s wider circumstances.

The facility provided the business with access to working capital as invoices were raised, helping to bridge the gap between delivering services and receiving payment from customers. This was particularly valuable following the acquisition, when the company needed to preserve liquidity while continuing to fund its ongoing operations and strategic changes.

The additional cash flow also provided the business with the flexibility to meet capital expenditure associated with implementing its new strategy while maintaining its day-to-day financial commitments. Rather than allowing the acquisition and subsequent investment requirements to constrain the company’s working capital, the invoice finance facility provided a source of liquidity linked directly to the underlying receivables.

This case demonstrates how invoice finance can provide an alternative source of working capital for businesses with strong receivables but limited available cash. By taking a holistic view of the company’s financial position and identifying the strength of its debtor book, Enness was able to structure a facility around the client’s specific requirements.

If you or your clients are looking to raise working capital following an acquisition or are experiencing pressure caused by long payment terms, speak to a mortgage specialist to explore the available financing options.

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.