Sometimes things do not go to plan and it is hard to finance an unexpected bill. Sometimes businesses suffer peaks and troughs. Sometimes customers do not pay on time. Sometimes several bills arrive on the doorstep at once.
This is what happened to a Sussex based provider of Computer Equipment Services. A normally cash rich business, with sales in the region of £500,000 per annum; it found itself struggling when all of its bills arrived at once.
Unfortunately this business had also been holding off paying HMRC until the payment deadline had become critical.
As this was the first time the company had encountered a business finance problem, its first port of call was the Bank.
However it found that the Bank was less than helpful. Indeed, the Bank refused to help the company on the basis that the company had a cash flow problem and needed to borrow money to get itself out of it.
Unsurprisingly in this climate, our risk adverse Banks are not too keen on this type of lending. Not knowing where to turn, the company contacted its Accountant.
Now, the company’s Accountant and I had met previously at a Networking event. Following our introduction, we had discussed the immense amount of business finance options available in the market.
In particular we spoke about the necessity for businesses to take time to research the best and most cost effective business finance solutions. The reason? There are many alternative sources of finance available to a business that can be tailored to suit individual needs.
Accordingly, after having been approached by its troubled client, the Accountant contacted me. After being handed the brief, I was able to source an Asset Finance package for the company, involving the sale and lease back of vans belonging to the company. The Asset Finance facility raised £20,000, enabling the client to pay the HMRC in full.
I mentioned earlier that in this case, time was of the essence. I should therefore point out that once the commercial finance company had established the value of the vehicles, we were able to secure an initial indication of funds available to the client within 24 hours, and the client was in receipt of its funds within 5 days.
Subsequently, as a result of the sale and leaseback agreement, the business was relieved of the pressure having a preferential creditor breathing down its neck. It was also in a position to repay the new debt over a short period of time, as opposed to having to find the total value in one lump sum.
Do you have a Client with a similar business finance problem? I would be delighted if you will share your comments.