Cash flow is one of the main reasons companies fail. Businesses of all sizes struggle to manage their cash flow, however, for many factoring is a great solution.

Factoring can offer many benefits to cash-hungry companies, and they take advantage of this type of funding for a variety of reasons. Many companies use Factoring to reduce the overhead of their own accounts department. Others use it to generate cash, which can be used to expand their business, increase distribution, or simply relieve short-term creditor pressure.

Read this case study to find out how we helped another business with cashflow issues.

Deal type: Business Restart.
Business sector: Courier.
Turnover: £600K.

This business began ind grew steadily. The company had invested heavily in new vehicles to expand its overnight delivery business as they had decided to join a pallet network. Whilst turnover did grow the company was actually losing money on the overnight delivery side, as well as it detracting from the profitable same day delivery business. One director resigned and another director invested into it over the last 2 years. The losses had not been stemmed quickly enough and the company could not sustain its borrowing and arrears with the Crown.

The company sought advice from an insolvency practitioner who recommended that the company seek the protection of Administration. A new company was formed and an agreement was reached to purchase the assets from the Administrator. There had been some confusion as to the best way to fund the first trading months and the invoices were assigned to the Administrator. They then realised that that was not appropriate and re-assigned the invoices back to the new company, finalising the agreement for the sale of the assets and asking for the payment of some fees.

The company could not meet its payroll for the month and urgently required funding to keep their staff. They needed someone to pay the staff that week directly as well as the fees to the Administrator. The insolvency practitioner had suggested our involvement knowing that the new company would need working capital within a few months of trading. However, more urgently, the company now needed our support to meet ongoing payroll.

Our Solution

We are always geared to respond rapidly. Our team are geared to accommodate urgent requests and sourced a lender who make a credit decisions within hours, we were able to do the deal and ensure the business could meet its urgent payroll demands. Having originally been against factoring the directors were comforted by the personal service. We sourced a lender that could provide funding and allowed them to re-pay the insolvency practitioner for the assets of the old company immediately.

The Future

The company has changed the way they work to control overnight deliveries and are committed to continuing the business. The failure of the old company has ensured that lessons have been learned and the company has a bright future