Receivables Finance / Contract Securitisation

Unlike Invoice Discounting/Factoring, Receivables Finance enables organisations to raise cash against future revenues from fixed term contracts of up to 10 years. Upon assignment the company can receive full, or partial, payment for the total ‘Net Present Value’ of the contract upon signing.

We are effectively looking at the two basic essentials of lending; ability to repay and willingness to repay. Whom the contract is with will help determine the ability to repay.

We are looking for good covenant as in Local Authorities/NHS/Plc’s. Additionally, there has to be an agreed minimum value to the contract, a fixed term to cover the period of the assignment and no exit clauses. If a contract does not contain the necessary clauses we can add these by way of a “polyfiller letter” or addendum to the original contract.

The contract lends itself to both equipment and service/rental contracts. We have provided this facility for companies providing services/products as diverse as water coolers, fibre networks, training services, nursing homes, computer software/hardware, aerospace, logistics, outsourcing, video games, waste recycling and CCTV/electronic equipment. The facility will work for many sectors.

The fact that we purchase Receivables means that, unlike other lending institutions, we do not place additional burdens on the companies that we support. Additionally, as our security is the contract it still leaves the customer with bargaining tools in regard to Business Banking facilities, Factoring, Invoice Discounting and Equity funds.

In summary this approach provides the following benefits:

  • Avoids negative cash flow in the start-up phase of new contracts.
  • Leaves existing lines of credit in place.
  • Can help fund company expansion.
  • Allows early release of cash against future contracted income.
  • Full or partial funding of future receivables may be achievable.
  • Contract terms may be up to 10 years in duration
  • The agreement is fully compliant with all PFI/PPP guidelines and legislation for public sector / government contracts.
  • Receivables funding capabilities extend in value from £30,000 - £100 million subject to the satisfaction of our underwriters.

This is very much a niche product but can be used to great advantage over a wide range of companies, products and services.

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