Funding Guide

Keeping your cash flowing

Healthy cashflow is one of the most valuable assets companies can have in the low growth trading environment. Certainty of funding allows businesses to shore-up their operations, effectively adapt to industry conditions and capitalise on expansion opportunities in their given addressable markets.

Flexibility, scalability and diversity naturally remainkey considerations for firms when re-addressing their finance needs. As a result, asset based finance continues to grow in popularity, both in isolation and complementing other sources of bank financing, with firms opting toleverage the value of current and fixed assets to boost working capital.

In the Midlands, we have seen significant demand for asset based finance products as firms in the manufacturing, automotive and property sectors look to defy the downturn and keep one eye on expansion.

Invoice finance, which includes invoice discounting and factoring, is part of the asset based finance funding mix and leveraged on thevalue of a firm’s bills, bridging the gap between issuing invoices andreceiving payment. This form of funding is particularly relevant given theregion’s strong history of overseas trade and the extended payment times, which naturally occur when dealing with customers abroad.

According to the latest statistics from the Asset Based Finance Association (Q3 2011), invoice finance is growing faster than all other forms of lending, with total advances up nine per cent compared to the same period in 2010.

Factoring is an ideal form of finance for smaller companies and start-ups, as the funding does not require businesses to havefiled their first year accounts. It enables them to capitalise on initial demand and provides a built-in account management function which serves to freeup administrative time previously spent chasing late payments.

As part of the overall capital structure, asset based finance can offer a tailored solution for company growth and, also, corporate transactions of all sizes, from domestic mid-market businesses to large multinationals with cross-border requirements. By looking at each deal on a case by case basis, we are able to effectively support both private equity-backed buyouts and M&A activity involving firms with significant tangible assets.

At Lloyds Bank Commercial Finance, we work with our colleagues across the wider organisation, including commercial and corporate banking, to provide the full range of asset based finance solutions, in tandem with business loans, overdrafts, banking facilities and other more complex forms of debt – providing the flexibility and diversity of funding required to succeed against a challenging business backdrop.

This approach ensures companies have access to the most suitable funding structures to allow them to meet their business strategies, whether they are refinancing, shoring up cashflow, investing for growth or leading corporate transactions.

Through our local offices in Birmingham and Banbury, we remain committed to supporting the growth ambitions of the region’s SMEs and large corporates, and continue to work closely with the Midlands’ professional community to maintain the supply of well-structured asset based finance facilities.

Todiscuss your company or client’s funding requirements, please contact Martyn Freshwater (Regional Director in the Midlands, Lloyds Bank Commercial Finance) or Jon Adams (RegionalDirector in the East, Lloyds Bank Commercial Finance) on 0800 55 00 22, martyn.freshwater@lloydsbankcf.co.uk or jon.adams@lloydsbankcf.co.uk

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