invoice discounting case study

A recruitment company hiring out temporary staff who had been trading for several years with sales approaching £2m per annum who had a confidential invoice discounting facility with one of the major high street bank owned discounting companies approached us.

The company was trading profitably with a blue chip customer base but despite supposedly receiving 80% of invoice values up front from the invoice discounter they were constantly suffering from cash flow problems.

On closer examination it transpired that the company had one customer comprising half of the turnover and the invoice discounting company had placed restrictions on the funding to this company despite it being one of the largest supermarket chains in the country.

Additionally, the discounter had placed a blanket limit of £2,000 on all new customers until they had two month’s trading experience, irrespective of the creditworthiness of the company involved and this led to a farcical situation where the company had won a new contract from Royal Mail but had extreme difficulty in funding it due to the £2,000 cap on funding a new customer.

When they approached us, the directors of the company claimed that they were close to being forced to cease trading in spite of healthy sales and profitability but luckily we sourced a replacement facility for them from a more commercially minded funder

Please either return to the page about unapproved debts or see next page for details of the invoice discounting solution