2 Contents The Skipton Way 3 Invoice Finance explained 4 Sectors using Invoice Finance 5 What is Factoring? 6 An illustrated guide to Factoring 7 What is Invoice Discounting? 8 An illustrated guide to Invoice Discounting 9 A little about Skipton Business Finance 10 The types of businesses we cater for 12 Structuring a deal 14
3 The Skipton Way... Skipton Business Finance is a leading receivables financier with offices in Skipton, Leeds, Manchester and Birmingham. The company s award-winning service spans factoring and invoice discounting, boasts independent status and is a wholly owned subsidiary of Skipton Building Society, a mutual that has been serving its members for over 150 years. We truly believe that we're a pioneer in understanding the future potential of our clients and have enjoyed great success working with UK businesses that, when given access to additional working capital, go on to flourish and reach their true potential. Clients often highlight the impressive people-orientation of the business and laude the quality of the staff that they deal with on a day-to-day basis. Skipton Business Finance smoothly integrates the experience and expertise of its senior staff and management throughout all of its operations. Providing award-winning factoring and invoice discounting A pioneer in understanding the future potential of their clients UK-leading financier in the invoice finance market Part of Skipton Building Society
4 Unlock cash tied up in unpaid invoices The heartbeat of your client s business is their cash flow and recommending them a suitable invoice finance facility will aid their finances and help them build a sustainable and successful business. Simple Invoice Finance Ideally, money made from trading would come in before, for example, a major bill had to be paid or tax was due. As a business owner, your client will always have to have one eye on whether or not they have a shortfall of funds. If they do have a shortfall, it is known as a cash flow gap and invoice finance is a solution that can ensure a fluid cash flow within their business. A cash flow gap can increase and this is largely down to: > Suppliers tightening credit terms > Customers going bankrupt > Insufficient bank facilities available > Poor credit control Did you know? Invoice finance is supplied to 42,000 businesses and our industry transact over 212 billion of clients' invoices each year. Invoice finance takes two main forms: Factoring and Invoice Discounting.
5 Construction 1,344 Retail 153 Transport 2,831 Other 1,927 Number of businesses using Invoice Finance Enterprise Finance Guarantee The Enterprise Finance Guarantee Scheme (EFG) is a facility for small businesses intended primarily to improve the availability of working capital through term loans and the consolidation of overdrafts. Manufacturing 12,897 It s a great way to inject working capital into an existing business and by raising invoice finance against outstanding invoices, EFG can often compliment invoice finance facilities. Speak to your Corporate Manager for more. Services 12,675 Distribution 9,684
6 What is Factoring? Factoring is a flexible cash flow solution, which advances money to a company as it issues new invoices. Factoring is probably the most common form of invoice finance in the UK. Flexible Factoring The main benefit from factoring is that your clients will get cash against their invoices almost immediately and up to 90% of the value of their outstanding invoices. As factoring involves advancing a fixed proportion of each invoice, the money available to your client will increase automatically in line with their business growth. Factoring is a facility that is disclosed to your client s customers as Skipton Business Finance act on behalf of your client when chasing payments. You can be assured that we chase all payments professionally and efficiently and our credit control is an extremely effective service for businesses that do not have established credit management procedures. Did you know? There were 18,894 businesses with factoring facilities at the end of 2010, a figure that grows year on year. We re also proud to collect payments from customers faster than the industry average!
7 Step 1 Step 2 The Benefits of Factoring Your client invoices their customer and sends a copy to us Step 3 YOUR CLIENT SBF CUSTOMER We then advance your client up to 90% of the value of the invoice within 24 hours Step 4 SBF YOUR CLIENT Your client can receive funds within 24 hours of submitting an invoice Savings can be made on debt collection and sales ledger management, as Skipton Business Finance will do all of this on behalf of your client Factoring is very well priced against traditional business loans and overdrafts The facility keeps pace with the growth of your client s business Allows your client to know when funds are going into their bank account, rather than the uncertainty of when invoices will be paid Our collections department will then chase the payment from your client s customer Step 5 SBF CUSTOMER SBF CUSTOMER SBF YOUR CLIENT SBF Your client s customer will then pay us 100% of the value of the outstanding invoice We will then give your client the remaining value of the invoice less costs. You could also receive commission! YOU! Your client will not have to secure a loan against any other assets meaning more flexibility for their business At Skipton Business Finance, your client will have a dedicated Relationship Manager throughout the lifetime of their facility. That means no automated telephone services and no call centres. Just the direct contact details of a highly-trained and efficient Relationship Manager
8 What is Invoice Discounting? Invoice Discounting is exactly the same as factoring and advances money to a company as it issues new invoices. However the company continues to invoice and collect the invoices in the normal way and the service is confidential so they will notice no changes. Invoice Discounting Invoice Discounting is a popular alternative to factoring, which should be considered by companies that already have an experienced credit management team. Invoice Discounting can be disclosed or confidential, also known as Disclosed Invoice Discounting (DID) or Confidential Invoice Discounting (CID). With DID, your client is made aware of our involvement, usually through a 'notice of assignment' which is printed on copies of all invoices and all payments are made addressed to Skipton Business Finance. Did you know? There were a total of 17,466 invoice discounting clients in the UK in 2010 representing 180 billion of sales. With CID, customers have no awareness of our involvement and your client will continue to invoice and collect payments into a trust account.
9 Step 1 Your client invoices their customer and sends a copy to us Step 3 YOUR CLIENT SBF CUSTOMER Step 2 We then advance your client up to 90% of the value of the invoice within 24 hours Step 4 SBF YOUR CLIENT The Benefits of ID Invoice Discounting has ALL the benefits you d expect from factoring but if your client already has a well established credit management team, then they can still utilise this strength whilst benefiting from the extra cash released Invoice Discounting can be disclosed or confidential, also known as Disclosed Invoice Discounting (DID) or Confidential Invoice Discounting (CID) YOUR CLIENT CUSTOMER SBF CUSTOMER Your client will retain full control of the credit management. Your client s customer will then pay us 100% of the value of the outstanding invoice Step 5 SBF YOUR CLIENT SBF We will then give your client the remaining value of the invoice less costs. You receive commission! YOU! and 23% came from the distribution industry!
10 Who are Skipton Business Finance? Independent of the main banks, we are a wholly owned subsidiary of Skipton Building Society, an undoubted mutual financial institution established in With no expensive shareholder dividends to pay, the ethos of our business is very much focused on understanding our client's businesses and assisting in creating wealth and jobs in the regions, rather than purely profit. A Flexible Approach Our experienced team adopt a commercial approach to underwriting, putting people and business at the forefront of our decision-making process. We never use a system-style scorecard and make each decision based on the individual merits of each and every business. And the benefits don't stop there. When one of your clients becomes a customer of Skipton Business Finance you'll be pleased to know that we boast a low client-to-staff ratio meaning that not only will they always get direct access to the decision makers, but our specialised Relationship Managers can offer them all the time and focus they need. Did you know? Manufacturing companies only represented 23% of all new invoice finance clients in There are many other sectors to go for! This means that the funding facilities we can provide to your clients are set up and managed in a refreshingly different way to our competitors.
11 Clients often highlight the impressive people-orientation of the business and laude the quality of the staff that they deal with on a day-to-day basis.
12 We work with UK businesses... Those who sell goods and services to other business and those on standard credit terms not exceeding 120 days. Who do we cater for? Our funding lines start from as little as 25,000 and currently go up to 5,000,000 and our existing clients range from new-starts to established businesses with annual sales of up to 30,000,000. In 2011 alone, Skipton Business Finance will have served the SME sector for 10 years, providing them with a range of invoice finance solutions and unlocking cash that would have otherwise been tied up in unpaid invoices. Our commercial stance means that our experienced team use a common-sense approach and never use a system-style methodology to our underwriting. Did you know? In 2010, there were over 12,000 UK businesses in the services sector alone that used invoice finance facilities This gives greater flexibility in our approach to lending and means we are able to provide funding in many cases where the business may have already been turned down by their bank who have failed to see the future potential in the proposition.
13 Metal Fencing Manufacturer 900k Confidential Invoice Discounting 60k P&M 60k EFG Facilities MBO of family business A time critical deal completed in just 10 days from first visit. Precision Engineering Company 900k Factoring Facility Refinance This facility was to replace a very restrictive bank overdraft, where the bank were demanding increased personal security just to renew. Clothing Manufacturer 100k Factoring Facility Single Debtor Finance With only one customer, this was deemed by many lenders as far too risky to lend to. Skipton Business Finance was only too happy to help. Our flexible criteria benefits Sole Traders, Partnerships, Limited Companies and PLC s Transactions including acquisitions Management Buy-Outs and Management Buy-Ins New-starts and long established companies Profitable and non-profitable businesses Phoenix businesses Refinancing and Restructures Temporary Recruitment Agency 500k Disclosed Invoice Discounting New Start Supporting a quality management team following their split from previous unappreciative employer. Tool Making Company 160k Confidential Factoring Transaction - BIMBO To fund the management buy-out of this long established manufacturing business with additional new management.
14 What sets us apart from our competition? Your client is at the centre of everything we do and you can be confident that our hands-on and flexible client-management ensures a smooth and professional switch to our facilities. Signing up an IF Deal From the initial enquiry all the way to funding your client, Skipton Business Finance prides itself in making the experience extremely professional for both you and your client. We honestly believe that we re a pioneer in understanding the future potential of your clients and have enjoyed great success in working with UK businesses that, when given access to additional working capital, go on to flourish and reach their full potential. That s why we ve continued to grow and develop our client-orientated business model whilst offering excellent commission structures for our partners and introducers. And it all starts when we receive our first enquiry from you... Did you know? Skipton Business Finance won the prestigious Most Supportive Asset- Based Lender of the Year award at the 2010 St. Nick Turnaround Awards.
15 Step 1 Step 2 The Picture We Build YOUR CLIENT SBF SBF YOUR CLIENT Firstly, we require basic information of your client just to gain and understanding of how it operates and what type of facility they require. We can then determine whether a business will benefit from an invoice finance service. Step 3 SBF YOUR CLIENT If we feel we can provide the business with invoice finance, we will issue an offer which will outline: - The type of facility offered (factoring etc) - How much money we can make available - Cost of facility - Any further documentation that we may require - Personal Guarantee Next, one of our highly expereinced and efficient Corporate Managers who will try and build as big a picture as possible of how the business operates looking at various elements (see right). Step 4 SBF YOUR CLIENT Once an offer is accepted we then work to process the application, leading to legal documents being raised. Once all the relevant documentation is completed and signed, the facility can be set up. Financial situation It is essential for SBF to build up a complete history of the finances at your client s business. Actual and forecasted turnover, profit and loss and net worth will all be assessed. How the business trades We look at bureaucratic procedures, such as order confirmations, PODs and communication of payment terms amongst other information. Customers We need to know who your client s customers are so we can determine how credit worthy they are. Management Staff We like to know who the key people are in your client s business, including details of their previous work history and experiences and details of other businesses they have owned or been directors of. Even if they have been involved in a failed business, we are still able to help. Assessment The type of paperwork we usually like to see is proof of ID (a passport or driving licence), a data protection from, a sales ledger and a copy of their invoices.
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