Invoice Finance in the Builders Merchant Sector

Key Questions the finance provider will ask

Who do you sell to?

Do you raise many credit notes?

Whats the split between credit sales and cash sales?

Things the finance provider will look out for

Retruns Policy and Exchanges

Is the return of unused material allowed? This may lead to an increase in the level and numer of credit notes issued.

Debtor Quality

If the customer base is madeup of lots of smalll builders they may have poor ratings and may also be difficult to contact during working hours. This can cause issues with collectability and a potential increase of bad debts.

Mix of Cash and Credit Sales

Customers who pay for their goods using cash are not fundable under a factoring or Invoice Discounting facility.

Retrospective rebates

Are rebates or discounts offered to customers based on account turnover? Are thre discounts raised on each invoice or accumulated and applied retrospectively? If retrospective discounts are applied t may be becessar to reduce the prepayment amount and apply a reserve tlo avoid any shortfall setoff against outstanding invoces. 

The above may result in offering lower prepayment levels. Improving the above areas will reduce costs and improve cash availablty.

Call us on 0845 643 4722 if you are n this sector and looking to improve your cashflow.