Beware of your facility limit

When looking for a factoring oir invoice discounting facility it is important that you look at your requirement and your growth plans.

Thne overall facility is the maximum amount that a lender will provide you without agreement to increase the facility. You facility may for instance be capped at £500,000 which when you commence may be sufficient.

However, if you use this additional working capital wisely your turnover can grow dramatically. This growth will mean you require more cash a potentially the £500,000 limit may be restrictive.

Most lenders will tell you that they will increase the limit as required but in some instances this does not prove true.

For example there are some lenders in the market who are unable to lend such large amounts. Some of the smaller independent providers may not be able to offer this amount simply because they don’t have it. Other independents are restricted by the banks that back them. A lot of independents who are funded by the banks can lend up to £500,000 based on their own lending criteria. However, above £500,000 they need to obtain bank approval and this is then judged on the banks own criteria.

If you have signed up for a 12 month agreement with 6 months notice and within 6 months you find ther limit is restrictive you may find that you are tied in and your growth will be restricted for the next 12 months.

If you have amitious growth plans make sure that your choice of factoring company does not restricts what you are trying to achieve.

In the first instance why not discuss your requirement with Smart Factoring Quotes on 0845 863 0738.

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