Choice Loans joins Platform Black for invoice finance

We are pleased to say that from today we can offer invoice trading to UK companies via the online trading platform; Platform Black. This relatively new approach allows companies to auction their invoice to the best bidders and therefore provides much-needed competition in the invoice finance sector. Joining this platform is yet another progressive step Choice Loans is taking to ensure we can offer our customers the widest range of finance options and shows our willingness to embrace new technologies to achieve that. For us, joining Platform Black was a very easy decision. We feel their approach offers many benefits over traditional invoice finance options:

• The main benefit is that there is no long-term commitment by the client. Invoices can be selectively sold as and when the client requires funds
• In setting up an auction to sell their invoice the company gets to set the "reserve" terms under which they are prepared to sell their invoice e.g. maximum cost of finance they will accept. Once the auction has filled the cost to finance is then competed down by investors.
• There are no minimum or maximum auction sizes
• No debentures or personal guarantees from Directors are required
• The whole process takes just days, not weeks, to complete ensuring funds are released to the SME quickly
• Platform Black is, on average, two to three times cheaper than Market Invoice

Where this system really excels is in terms of the Buyers that are operating on it. Traditional invoice finance has the Seller exposed to just one Buyer and forced to accept their terms. On Platform Black the Buyers include a range of High Street Banks, Finance houses, Investment funds, Family Trusts and High Net Worth Individuals. All these Buyers are seeking an enhanced return on their funds and so compete with each other to buy invoices to the benefit of the SME selling their invoice. In our investigations before joining we asked some questions about how the system works: What percentage of my invoice can I get paid in advance? Any percentage up to 90% for Invoice Trading and 100% for Supply Chain Finance 100%. Will my Debtor know I am selling my invoice? No, not for Invoice Trading as this is a confidential service. Yes for Supply Chain finance as it is the Debtor who is giving their suppliers access to finance. What is the cost to me, the Seller of the invoice? Apart from the cost of finance set by the investors competing to fund the invoice, there is a transaction fee set by the seller (0.5% of the amount advanced for 30 days, min £100; 0.75% for 60 days, min £150; 0.9% for 90 days, min £180). What happens if the Debtor fails to pay the invoice on time? The credit risk of the invoice reverts to the Seller after the 30, 60 or 90 day credit period. Can I set an auction for an "odd" period like 24 days or 2.5 months? No - but there are benefits from early repayment. To offer conformity across the platform that attracts more Buyers all auctions are conducted for 30, 60 or 90 day periods. If your invoice is 24 days then you pay for 30; if it's 2.5 months you select for 90 days and the cost will be discounted down to 70 days on a per diem basis. Standardising the process in this way allows more people to bid with certainty and this competition reduces the discount you will have to pay. Can I bundle invoices and sell them all together? Yes, but they must all be from the same Debtor. If you are an SME looking to release cash flow by selling invoices but don't like the idea of tying in to a Bank's invoice finance program and being restricted to having one Buyer then come and talk to us about joining Platform Black. We can help you set up your account and guide your activity on it, all at no extra fee to you. Call us on 0845 1260350 or complete our Invoice Finance Enquiry form here.