A Matter of Appetite
The world of invoice finance has seen some casualties in the last year, which is no surprise given the economic climate, with many lenders either pulling out of the UK market, incurring bad debts or unable to secure sufficient funding to grow their lending book. Fortunately for us all, our lenders are still putting the deals away and in some cases growth is stronger than ever. We’re firm believers in risk vs. reward and now that price competition is over to some extent, gone are the days where low service fees and silly margins over base or Libor to win a deal are the norm. At Now Financial Partners, we specialise in distressed situations and do not believe in pushing the lender to provide their services for peanuts. There has been a mentality for a long time that client numbers are more important than making money. Naturally, no lender would actually say that but if you think about it, that is what has been happening. Yes, it’s important to ensure the client gets a fair deal but when the business goes under and the lender is holding the baby trying to collect out, if the deal was priced correctly in the first place, no one could complain.
The same applies to the overall shaping of an IF deal, prepayments have generally been reduced and for good reason at 90% there’s little fat in a collect out to ensure the lenders get their money back – believe it or not we feel that this is a good thing for clients. A shortfall means looking at what personal assets and liquidity the client has. Price is not the issue in a distressed situation – it’s a factor but timing is the main issue and that’s why we use the lenders who are tried, tested and proven – so long may it continue.