£3.5 M Invoice Discount Facility for Maintenance Business in Offshore Energy Industry

• Client: Maintenance business with approximately £30 million revenue
• Facility Limit: Circa £3.5 million
• Debt: Contractual receivables

Enness was approached by a highly profitable business operating within the maintenance industry, supporting both onshore and offshore projects. The business had recently secured a number of significant contracts that were considerably larger than those it had undertaken previously. While the company had the operational capacity and confidence to deliver the new contracts, the increased scale of its work created a substantial requirement for additional working capital.

The business faced three key challenges. First, its existing invoice discounting provider, a high-street bank, had capped its facility at approximately £1 million. This provided limited headroom as the company’s working capital requirements increased alongside its growing order book.

The issue was compounded by the long payment terms typically associated with the business. There was a significant period between completing work, raising invoices and receiving payment, creating additional pressure on cash flow while the company continued to meet its operational costs.

The composition of the debtor book also made the transaction more challenging. The business had a high concentration of international clients across jurisdictions including Italy and Africa. In addition, much of the underlying debt was contractual, with payments made throughout an ongoing project rather than following a simple delivery-and-payment model. This meant that many lenders were unable to accommodate the level of invoice discounting the business required.

Enness took the time to understand how the company generated and invoiced its contractual income. Although the receivables were contractual, the invoicing cycle was based on timesheets, providing a clear record of billable hours and a sufficiently defined basis for the invoices being raised. This helped demonstrate that the receivables could support a larger invoice finance facility.

Enness subsequently identified a specialist lender that was comfortable with the business’s international debtor exposure and the specific characteristics of its maintenance contracts. The lender agreed to provide a facility limit of approximately £3.5 million, significantly increasing the available working capital compared with the company’s existing £1 million facility.

The additional headroom gave the business greater flexibility to fund its growing working capital requirements while continuing to undertake larger contracts. The revolving nature of the invoice finance facility also meant that funding could be aligned with the company’s receivables and ongoing trading cycle.

This case demonstrates the importance of understanding the underlying nature of a business’s receivables rather than assessing them solely by industry or jurisdiction. Although contractual debt and international debtor exposure can make invoice finance more difficult to arrange, a clearly documented invoicing process and strong underlying business performance can support a bespoke lending solution.

Enness’ international market access and relationships with specialist lenders enabled us to identify a lender capable of accommodating the client’s particular requirements. If you or your clients are looking to increase working capital or explore invoice finance options, speak to a mortgage specialist to discuss your circumstances.

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, debtor profile and the proposed facility.