NACFB Magazine – Case Study – Our facility replaces bank line

Confidential invoice discounting solution replaces bank line

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NACFB - Positive Cashflow Finance - Website

Positive Cashflow Finance was established almost 10 years ago. Over the years we have expanded our standard offering of invoice finance facilities of up to £1m to include the Positive Plus advance, which has enabled us to leverage additional funding over and above the client’s invoice finance facility when growth opportunities arise, or equally importantly, when times are hard.

It’s easy to lend money when all is well – the acid test for any funder, though, is how they handle the difficult situations. Our four founding directors have over 100 years of industry experience and those skills are evident when we are structuring these types of deals.

Sudden Uncertainty

One of the larger deals we approved last year was to support a second generation family business that manufactured office furniture. The broker-led introduction came to us after the client had been advised by their bank that, following a poor year’s trading, they were planning to withdraw the £250,000 overdraft facility – this despite a longstanding relationship spanning over 20 years.

The same bank had also been providing an £800,000 confidential invoice discounting (CID) facility for over eight years – but while this ran well, the family had understandably become nervous following the bank’s unexpected decision to withdraw the overdraft.

Filling the gap of the bank

Recognising that it was a longstanding and fundamentally sound business, we agreed an £800,000 CID facility to replace the existing bank line and also injected a £300,000 Positive Plus advance, secured on the company premises, which were valued at £500,000. This replaced the bank overdraft and provided a further £50,000 to ease cash flow and create headroom.

The Positive Plus advance was agreed on an open-ended term, whereby the company only had to cover interest and a monthly fee for the first 12 months, at which point we agreed to sit down and review the position. Capital repayments from cash flow or the option to take out a long-term mortgage on the property would be a simpler proposition once profitability was restored. This approach helped relieve the immediate monthly cash pressure and enable the directors to spend more time concentrating on the turnaround programme.

By establishing a sound understanding of how a business operates – warts and all – and equally importantly, the skills and experience of the people running the company, there are plenty of opportunities to support businesses in good times and bad.