The lending barrier
Consider a business selling to established business customers on payment terms. Sales have grown, but wages and suppliers fall due before customers pay. More turnover increases the cash-flow gap, and the owners want to understand whether unpaid invoices could support funding.
How we approached it
In this scenario, we review the aged debtor ledger, customer concentration, payment history, disputes and evidence that goods or services have been delivered. We compare invoice discounting and factoring, including who collects payments and whether customers are notified. The comparison includes eligible invoices, reserves, fees, minimum charges and any existing security over receivables.
The outcome
Where the ledger qualifies, a facility could make part of eligible invoice value available earlier, with the remaining balance released after collection and applicable deductions. The example helps explain the mechanism; the amount available changes with eligible invoices and lender terms, and customer non-payment may remain the business’s risk.
What this means for borrowers
A large debtor balance is not the same as an eligible funding balance. Check customer quality, exclusions and total fees alongside the advance rate, and make sure the arrangement fits customer relationships as well as cash flow.
This is an illustrative scenario comparable to deals we have handled for our clients. Figures and outcomes are examples; lending remains subject to individual assessment.