When entrepreneur and sole trader Karl Hannaford of USP Packaging went to his bank to finance the launch of a new range of drinking containers, he was turned down flat.
Despite his company's success and track record in providing disposable catering products and tamper evident containers to food companies across the UK, his application was refused.
Instead he sought the help of a commercial finance broker, Touch Financial, who in turn introduced Karl to one of a panel of specialist invoice finance providers who took a rather more positive stance regarding his plans.
"I looked at six or seven different companies, but chose Touch Financial to help me because they seemed genuinely interested in my business and what I was trying to achieve," he says.
The factoring package that Touch Financial brokered allows Karl to secure cash in advance against the invoices he raises - usually up to 80% of the invoice total. The more invoices he generates, the more cash is made available, which far exceeds what would have been available through a bank loan or overdraft facility.
Since the invoices are generated and followed up by the factor, Karl can focus on what he does best - selling - without having to worry about chasing customers for payment.
"Since I am fully occupied with managing purchasing, stock control, sales and marketing, putting in place a factoring agreement means that not only do I have cash to invest in the business, but also my administrative burden is reduced," he adds." There is always someone there to do credit checks, collect money and manage the books.
"Invoice financing gives me a fast track to finance enabling me to expand my business far quicker than I would otherwise have been able to do," he concludes. "It didn't take long to set up and now I can focus on growing my company."
Simon Carter, Director of Touch Financial, says that many small businesses are still being under-served by their banks: "If you have a good business plan, and a good product to sell, then invoice finance is the easiest and fastest way to get the cash you need to succeed," he says.
