Invoice Discounting and LIBOR
Discussion
Some advice from the Finance boys please
My business uses an Invoicing Discount facility which currently costs me 1.5% margin on top of the BoE base rate ie 4.5% after yesterdays cuts. Due to the company doing well I need to extend my facility limit to meet my working capital requirements. My lendor has told me that they would do this but have to move me to margin + Libor which would take me to 7.1%. They have told me that they are losing money on my business at the moment due to the huge variation between LIBOR and BoE Base Rate.
My questions are
1. Are all lendors moving to a LIBOR + Margin costing model thus rendering the recents cuts next to useless with LIBOR where it is.
2. Do you expect LIBOR rates to gradually fall to within 0.75 of the Base Rate
3. Which banks are still offering ID facilities at Base Rate + Margin because I think I will need to move soon.
TIA
My business uses an Invoicing Discount facility which currently costs me 1.5% margin on top of the BoE base rate ie 4.5% after yesterdays cuts. Due to the company doing well I need to extend my facility limit to meet my working capital requirements. My lendor has told me that they would do this but have to move me to margin + Libor which would take me to 7.1%. They have told me that they are losing money on my business at the moment due to the huge variation between LIBOR and BoE Base Rate.
My questions are
1. Are all lendors moving to a LIBOR + Margin costing model thus rendering the recents cuts next to useless with LIBOR where it is.
2. Do you expect LIBOR rates to gradually fall to within 0.75 of the Base Rate
3. Which banks are still offering ID facilities at Base Rate + Margin because I think I will need to move soon.
TIA
m4tt said:
Try HSBC, their Invoice Finance service is brilliant, and offer a few things that none of the other lenders do. Not sure whether they have switched to LIBOR but if any of the banks weren't going to switch I'm sure it would be them, considering their funding situation.
HTH
I will second that ... we use HSBC and they have been very good to us, and we had a good meeting with them this last week and they didn't mention any change so ... read from that as much as you want.HTH
Close Invoice Finance have just moved from BoE to 3mLibor. They have reduced their margin by half a percent though. So in essence they've passed on about half of the 1.5% Base rate cut to us.
Rates asside, I have been with Close for many years and cannot fault their service and flexibility.
They offer a rather juicy referral scheme too, so if anyone would like me to put my client manager in contact for a quote, email me!
Rates asside, I have been with Close for many years and cannot fault their service and flexibility.
They offer a rather juicy referral scheme too, so if anyone would like me to put my client manager in contact for a quote, email me!

richardxjr said:
Close Invoice Finance have just moved from BoE to 3mLibor. They have reduced their margin by half a percent though. So in essence they've passed on about half of the 1.5% Base rate cut to us.
Rates asside, I have been with Close for many years and cannot fault their service and flexibility.
They offer a rather juicy referral scheme too, so if anyone would like me to put my client manager in contact for a quote, email me!
You have email.Rates asside, I have been with Close for many years and cannot fault their service and flexibility.
They offer a rather juicy referral scheme too, so if anyone would like me to put my client manager in contact for a quote, email me!

TIA
Having had further chats with our existing lendor I will definately need to move. They have just confirmed they will support our requirenment for an increased facility if we move to LIBOR + 5.7% margin (Not a typo Five point seven % !) I am guessing they no longer want to be in our sector.
For the record we are a £30m turnover specialist recruitment firm with good profits and a healthy balance sheet. The current lendor funded our MBO in 2003 and I am at a loss as to why they no longer want our business.
The lendor is GE.
For the record we are a £30m turnover specialist recruitment firm with good profits and a healthy balance sheet. The current lendor funded our MBO in 2003 and I am at a loss as to why they no longer want our business.
The lendor is GE.
Second time I have heard from a GE customer today! The other one was moaning because the message he is getting is that his account is too small!
So that's 2 referrals to Close from me today
Honestly, I have been with them nearly 10 years and I cannot speak highly enough of their service.
They have a great online thingy too.
ETA: For info I am on FULL FAT factoring with Close. 90% draw-down & 120-day recourse. Paying 3mLibor+2.5% including full credit control.
So that's 2 referrals to Close from me today
Honestly, I have been with them nearly 10 years and I cannot speak highly enough of their service.They have a great online thingy too.
ETA: For info I am on FULL FAT factoring with Close. 90% draw-down & 120-day recourse. Paying 3mLibor+2.5% including full credit control.
Edited by richardxjr on Monday 10th November 16:23
Thought I would give you an update on this.
GE Have now said that if I stay with them I can expect 3mLibor plus 5.7% - I am guessing they no longer want to be in this market sector.
Close Brothers have told me that £5m is the maximum new facility they will look at.
HSBC, Barclays and RBS Have all given indicative terms varying between Base + 1.5% and Base + 2% with an arrangement fee of anywhere between £15 and £50k. They are all confident of credit approval subject to usual audits etc.
GE Have now said that if I stay with them I can expect 3mLibor plus 5.7% - I am guessing they no longer want to be in this market sector.
Close Brothers have told me that £5m is the maximum new facility they will look at.
HSBC, Barclays and RBS Have all given indicative terms varying between Base + 1.5% and Base + 2% with an arrangement fee of anywhere between £15 and £50k. They are all confident of credit approval subject to usual audits etc.
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