Asset Based Funding Explained

Does your business need fast access to finance? Would it benefit from additional cash to help the cash flow? Is lack of cash holding back business growth?

That’s what Asset Based Funding is all about. It’s a commercial tool that allows almost any size or type of business to secure additional funding.

The most common form of asset based funding is Invoice Discounting or Factoring. This releases the cash that’s tied up in your sales ledger. It means you can be paid up to 95% of the value of your outstanding sales invoices, often within 24 hours of raising invoices.

Invoice Factoring brings the additional benefit of the Factor taking over management of your credit control, reducing your operating overheads.

Invoice Factoring in action

Invoice Factoring is one of the most common forms of asset based funding available. Here’s how it works:

  • Step 1 – You identify the most suitable lender. This is best done via an independent broker who’s familiar with the wide range of lenders and products available.
  • Step 2 – You enter into an arrangement with the lender, usually for a fixed period of time.
  • Step 3 – The lender immediately advances you up to 95% of the value of your outstanding sales invoices.
  • Step 4 – Every new invoice you raise is sent to the customer and the lender, and you are paid up to 95%, typically within 24 hours.
  • Step 5 – The lender pursues the customer for payment. When it’s received, you’re paid the outstanding balance. The lender usually deducts a small fee at this point.

If you would like a quick and easy insight into how much cash your business can release through Invoice Factoring, you can compare quotes instantly online.

Learn more about factoring by reading our online guide >>

Am I eligible to use Asset Based funding?

Asset Based funding is accessible to a wide range of organisations, from sole traders to public limited companies.

If you’re not sure whether your business might qualify, here’s a quick list of key criteria:

  • The business needs to be based in the UK.
  • It should have a turnover, or projected turnover, of at least £50,000.
  • It needs to own assets that are not already used as security for loans or overdrafts (remember – your sales ledger is an asset!)
  • To qualify for Invoice Factoring or Discounting it needs to be a supplier to other UK businesses.
  • It should offer invoice credit terms of 30 to 90 days.

If you’re still not sure about the suitability of Asset Based funding for your business, why not give us a call right now?

One of our experts will be happy to answer your questions and there’s no obligation to take it any further.

How much does Asset Based funding cost?

Asset Based funding is a cost-effective way to improve cash flow. It can provide the funding you need for business development.

Some Asset Based options also bring additional benefits. For example, Invoice Factoring transfers the costs of managing credit control to your lender. This releases you from time-consuming administration, and allows you to focus your resources on the more important task of growing your business.

The exact costs of Asset Based Lending (ABL) will vary depending on the exact solution that you choose. However, it’s a fast and flexible and solution that’s being used to meet the needs of thousands of businesses in the UK.

Give us a call at Touch Financial to find out how asset based funding can benefit you today.

Compare asset based funding quotes instantly online >>

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Every month Touch Financial help businesses improve their cash flow with invoice finance. Request a quote to find out how much extra cash you could raise.

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