Invoice based lending: an alternative?

With factors such as the growth of e-commerce driving demand from consumers, firms are increasingly looking to reduce costs as well as increase the speed and predictability of product movement. The firms that survive will be those offering the widest range of services, at the highest quality, but the lowest price. It is vital that materials handling businesses show themselves to be flexible, and able to respond to the ever-changing nature of the supply chain.

Due to the varying cash flow requirements of materials handling firms, traditional lenders are not always able to accommodate their needs. Even if businesses do approach these lenders, they may find themselves caught up in a lengthy process, with no guarantee of funding at the end of it. The alternative is an invoice finance facility, allowing firms to receive an advance on the cash they are due from customers, or an asset-based lending (ABL) facility, a cost-effective way to refinance physical assets. Each offers the benefit of freeing up working capital, allowing firms to make the investments they need to keep on top of the requests of their customers, be that through refinancing property, equipment or vehicles.

Hannaman Materials Handling, a forklift truck and material handling equipment specialist, is on course to double its turnover by 2017 following funding support from Secure Trust Bank Commercial Finance. The invoice finance facility will be used to improve cash flow and assist with the expansion of the business. The firm now plans to expand across the North West, both organically and through a series of potential acquisitions.

Ian Adams, business development manager at Bathgate Business Finance, added: “Hannaman came to us looking for a funder that really understood the long-term goal of the business. We originally had four funders that pitched, which was narrowed down to two. What Secure Trust had to offer in terms of the reputation of the bank, as well as understanding the business needs, made it the clear winner. Hannaman has a great challenger bank behind it, and we are pleased we found it in the right financial solution.”