As a practice we are increasingly coming across businesses who had secured a variety of funding facilities either directly themselves or through an intermediary a number of years ago. These businesses have not reviewed their funding needs or current facilities since they were first incepted.
- This lack of review can raise the following unchecked questions: –
- It the funding still appropriate to the business needs today?
- Is the cost of funding reflective of the current market rates?
- Is the funding set on a true bank base rate or over a rate set a number of years ago?
- Are there more cost effective ways to finance the business now?
- Do you have all of your eggs in one lenders basket?
This is particularly appropriate to factoring and invoice finance facilities that have been in place for a number of years. We regularly come across agreements that are not over a true Bank of England base rate. It is not uncommon to see interest rates set as high as 6% + the lenders margin.
As with the company’s business plan, commercial finance agreements should not be left gathering dust in an office cupboard or set of drawers. For some businesses the cost of finance can be a significant item of their profit and loss account.
A simply review of your existing commercial finance arrangements can save you literally thousands of pounds of your hard earned profit.
Ask yourself this question, how many of your products or services would you have to sell to achieve a £10,000 net profit. A simple review by a commercial finance broker could take only and hour or so and they will do all the hard work for you.
In an uncertain commercial funding market it is important to note that a review of your finances can happen without the knowledge of the existing lenders or banks. So there is no need to worry about them removing facilities just because you are shopping around for more competitive options.
With the demise of the traditional bank overdraft, invoice finance facilities are increasing in popularity and therefore more providers are available than there were a number of years ago. This is a fiercely competitive area of the commercial finance market and significant savings are available to those that seek them.
Finally, with the emergence of new players it is essential that you use a commercial brokerage that has a whole of market approach. This way you can be assured that you are receiving a completely unbiased and balanced view of the market. With the specialist team at Goodman Corporate Finance you can be assured that a facility can be tailored to meet with your exacting requirements.