Credit insurance
Tel: 01424 217698 or 07971 996658 Fax: 0845 127 4385
Rycroft Associates

Company Finance Information Page:


A simple guide and overview to the differing types available

Factoring - Recourse - Once you have delivered goods and raised an invoice, you can then draw down funds against a pre-agreed percentage of the invoice value to pay existing bills or purchase further goods whilst you wait for your own invoice to be paid.
This alleviates your cash flow and allows you to grow your business. E.G. if you are in the printing trade you may want to purchase paper in advance to receive some of the large discounts that paper suppliers give for prepaid goods or you may have weekly employee wages if you are an employment agency, but don't actually get paid yourselves for 60 days. Once the invoice has been paid, the financier then offsets this against your account.

Factoring - Non Recourse - As with Recourse you draw down from invoices raised, however, if you do not receive payment from your buyer, you do not repay the financier, although there is a cost bearing to this as it is effectively finance with credit insurance and you should always weigh this option up against a Recourse factoring facility with a seperate credit insurance policy.
So, in rather simplistic terms, with recourse you have to pay the borrowings back at some stage, whereas, with non-recourse you don't.

Asset Based Finance (Stock, Plant & Machinery, Freehold Premises) - For the larger T/o company looking to expand whereby plant & machinery, stock or freehold property is not already tied up as security, this can provide an extra tranche of finance to replace overdrafts and is generally where extra funding of between 250,000 and 2,000,000 is required.

Trade Financing - Trade finance comes in a variety of shapes and sizes, from venture capital to advances against a Letters of Credit (L/C). If funding is not required but you still use L/C's as a means of security then Credit insurance may be the better option as it is generally more cost effective and less sensative to the administration issues often presented with L/C's.

Small Firms Loan Guarantee Scheme (SFLGS) - up to 250,000 pounds can be obtained via the Governments SFLGS which is designed to help small business's expand, invest in plant & machinery, acquire new business premises, develop projects or improve IT & operational efficiency, when other borrowing options are not available.
Loans may be taken out between 2 & 5 years with repayments monthly or quarterly and usually takes 10 working days to receive confirmation of elegibility and an offer.

Costs - costs of any of the above schemes are completely individual and based upon a variety of facts - amount borrowed, period of loan, etc. however quotes are free of charge.

Finance Home Page Back to the last page, where you can choose to look at the more in depth details of schemes available, Credit Reports etc.

Email this page to a colleage (Open email)

© copyright July 1996 to 2011 Rycroft Credit Insurance Consultants