Manufacturer in administration reviewed for invoice finance facility
Hilton-Baird Audit & Survey has helped an invoice finance company to appraise a prospective client in need of new cash flow support.
The business, a manufacturer of paper and boards, was in administration but required a new finance facility to release cash against new invoices raised while a buyer was sought.
Working alongside the administrator, we conducted a pre-lend survey in order to understand the company’s underlying health and infrastructure before making recommendations, with the instructing lender looking to fund the new debt once a buyer was found and gain assurances the old debt was collectable.
After visiting site just three days after instruction, we discovered that there were good paper trails and administrative processes in place. However, in addition to recent HMRC arrears, the company’s credit control performance hadn’t been as strong as it might have been, with high levels of export debt and extended credit terms for customers.
Despite this, we were able to verify that the debt was robust enough to be collectable and that the business would therefore be suitable for a disclosed invoice finance facility to fund the new invoices, providing the business with the cash flow support it required while a new buyer was found.
Given the past performance of the credit control historically and to support this facility, Hilton-Baird Collection Services were engaged to step in and provide a confidential credit control facility to recover both the old debt and newer invoices, providing peace of mind for the lender and administrator.
Additionally, to provide added security, we recommended that contracts are reviewed and PAYE monitored closely.
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