Frequently Asked Questions
What can we use single invoice finance for?
You can use it for all sorts of things. Here are some of them:
- Growing your business faster by releasing cash and using it for things like stock, new equipment, key hires, or business development
- Managing cashflow peaks and troughs, enabling you to pay your staff, suppliers and HMRC on time and avoiding the impact of missing due payments
- Winning business by funding long lead times or extended payment terms to customers
- Avoiding raising expensive long term capital from other sources when your cash requirement isn’t long term
Why is single invoice finance better than an overdraft or invoice finance facility?
For many companies it can be. Here's why we think so:
- Flexibility: there is no long-term commitment or contractual obligation. Each transaction is a standalone transaction
- Control: you only use it when you want funding, and you only offer the invoices you choose for sale
- Clarity: pricing is easy to understand and fixed:
- No set up fees compared to an overdraft or invoice finance facility
- Charges are based on the amount you raise each time, not your total turnover or the size of your overdraft or invoice finance facility
- No fees at all between transactions
- No termination charges or break fees
What kind of companies do you work with?
We work with growth-focused owner-managed businesses and venture capital or angel-backed businesses.
We look for potential, so you can be young as long as you are growing. We look for sales of at least £250k expected this financial year. You need not be profitable right now but you do need to be earning good gross margins; we would suggest at least 30%.
You should be providing goods or services where invoices are issued after delivery/completion or, if not, where scope for dispute, retention, return, etc. by the end customer is very low. Stage payments and advance payments are fine if they meet these conditions.
What industries and sectors do you cover?
We deliberately cover a wide range of industries and sectors. The common characteristic is that they tend to be in growing markets. Sectors we are particularly interested in include: high value manufacturing, software/services, technology, healthcare products and services, consulting, media (film, TV, digital), marketing and PR, distribution, and executive search. Otherwise we have no formal sector bias, except that we do not deal with construction-related businesses.
What geographical areas do you cover?
We want to establish a good understanding of our clients' business, so we will always visit you on site. We are based in Oxfordshire and offer national coverage.
Can we use invoices to any of our customers?
You should be trading mainly with UK based end customers, although some international business may also be fundable.
Customers can be public or private companies. They may also be government departments or agencies, local authorities, NHS or other public sector bodies such as the BBC, or other not-for-profit entities. They could also be large partnerships in professions, eg lawyers or accountants.
Our minimum size for end customers is £10m in sales for the last financial year. They must also be credit rated by agencies at an acceptable level, and must be credit insurable for bad debt.
What size of invoices do you purchase?
We typically purchase individual invoices of between £10,000 and £100,000 each, including VAT, as part of a maximum overall transaction size of £150,000 at any one time. For established clients we can go further, and we can also take batches of smaller invoices if they are to the same end customer.
How long can an invoice have to run before payment is due?
We typically advance against invoices with up to 60 days to run before payment is due. Depending on the end customer and your relationship with them we will also advance against invoices with up to 90 days until payment is due.
Any other conditions?
Yes, a few. The invoice must be based on a live and verifiable contract/order, either for goods or services already delivered/completed and accepted, or invoices validly issued in advance or under stage payment terms.
The invoice must be acknowledged by the end customer as valid, not in dispute, and cleared for payment. No terms of business like retentions, rebates, sale or return etc. should apply.
Lastly invoices should not be subject to any third party ownership or security structure, for example bank debentures or other charges, or should be capable of being carved out of any such arrangements. We can help you with this if it is necessary.
What do you charge?
We charge an administration fee based on the amount advanced. We also make a time-based charge for each day from the advance until the invoice is paid. The rate is set depending on our assessment of the credit quality of your end customer(s), the strength of your contract and the expected payment date for the invoice(s). Please call us if you would like to discuss a particular invoice; we always aim to be competitive.
We do not make a charge for the initial setting-up process. Other than the charges above, there are no other fees or costs for each transaction, and there are no costs or charges at all between transactions or to terminate the relationship.
Can you purchase invoices to non-UK end customers?
Yes we can, subject to the normal criteria and provided that the end customer is a major international business and the contract is enforceable in the UK under English or Scottish law.
Can we sell our invoices to you without our customers being told?
Yes. Where disclosure to the customer would be sensitive we are able to offer a confidential option where the end customer is not notified of the transaction. If you would like to explore this, then please call us to discuss.
How long does it take to set up?
Set-up and the first transaction usually takes about a week, often faster. After that, transactions are much quicker, usually the next working day after an invoice is approved for use. Transactions are easily repeatable, especially for invoices to the same customers.
Who collects payment of the invoice?
You do, although the payment will be made to our bank account. You keep the primary customer relationship and the responsibility for collecting payment of the invoice stays with you throughout the life of the invoice. Initially we will confirm with the customer that the invoice is valid and not disputed, and when it is due for payment. After that you keep the customer relationship and manage credit control as normal until the invoice is paid in due course.
What happens if the customer does not pay on time?
We understand that occasionally a customer may be late in paying, or that a dispute may arise after the invoice has been assigned to TINDERBOX. If the customer does not pay the invoice on the due date, we will expect you to resolve the situation with your customer as soon as possible within the next 30 days, so that the invoice can be paid. Alternatively if you prefer you can either repurchase the invoice, refunding the advance and paying any TINDERBOX fees due, or with our agreement you can supplement the original invoice with additional invoices to cover the amount owed.
What happens if my customer goes out of business or becomes insolvent before paying the invoice?
As part of our credit process we usually take out insurance against bad debts. This means that if your customer petitions for bankruptcy, or enters into any other insolvency process such as making an arrangement with its creditors, the insurer should cover all or most of the advance and fees due to TINDERBOX. In these circumstances we will not ask you to repay the advance or cover the fees, so effectively you benefit from the insurance we take out.
What does "with recourse" mean?
TINDERBOX has been set up to provide working capital to our clients, and the way we do this is to make an advance against the purchase (assignment) of an invoice. When you assign an invoice to TINDERBOX we do not take on the credit risk of the customer not paying, which remains with you. This is what is described as “with recourse”. In practical terms if your customer does not pay when due or disputes the invoice we will expect you either to resolve the situation with your customer or to refund the advance and pay any TINDERBOX fees due. Likewise, in the event of your customer becoming subject to any insolvency process, if we are unable to insure or unable to make a successful claim we will ask you to repay the advance and fees due.
How is TINDERBOX funded?
TINDERBOX is privately funded by the directors and other individuals.