Bank has charge on our debtors

I

IlDivo

Guest
Hi,

We are a growing company and have recently decided to go for invoice discounting. We have been through all the processes etc and we have been offered the facility at reasonable terms. But we have come across a problem.

We have a mortage for our premises with another bank and they have a charge on all the assets including our debtors. They won't release the charge on my debtors. The invoice discounting banks needs to have the charge on our debtors to protect themselves.

We have never missed a repayment (thank god!!) and both banks should have no problems with us.

Any suggestions

Thanks for all your help
 
sounds like your existing bank has two charges
- one fixed (over the company premises)
- one floating (a debenture over the company's assets)

you need the debenture released so that bank #2 can take a charge over the debtors. May be problematic as it weakens bank #1's security.

Can bank #1 do the invoice discounting for you?
 
Thank you very much for the reply...

We do most of our business with bank #2 and they even offered to take to mortgage from bank #1 last year. I suppose i can go than the route of bank #2 getting mortgage as well.

i am looking into bank #1 doing invoice discounting

but both of these options seem to be lenghtly in process...
 
Il Divo, would you mind sharing with me what kind of deal you got from the bank on your invoice discounting. PM if you wish.

Thanks
 
IlDivo said:
Hi,


We have never missed a repayment (thank god!!) and both banks should have no problems with us.

Any suggestions

Thanks for all your help
Click to expand...

Unfortunately, just because you have not missed a repayment does not mean that bank will a problem with you. The fact that you are looking to use invoice discounting shows that you are finding cash flow tough. God for bid should your company fail the bank will be exposed due to the negative equity in the mortgage and that is why they will be looking to keep a hold on the charge over the debtors.

Sorry, not much of a solution in what I have said. But before going ahead with the invoice discounting and paying bank fees etc. are you sure you have adequate control over your debtors or are there things that you could do yourself to improve your debtors days.
 
Thanks all for feedback...

Jack2009 - As with most people, this year has been a lesson in cash flow. We are working hard on our debtors - Shedding Previous Bad Payers and Getting New customers that are good payers.

But the big problem is that most businesses these days are having cash flow problems which means it is a bit of a vicious cycle we are in!!
 
IlDivo said:
Thanks all for feedback...

Jack2009 - As with most people, this year has been a lesson in cash flow. We are working hard on our debtors - Shedding Previous Bad Payers and Getting New customers that are good payers.

But the big problem is that most businesses these days are having cash flow problems which means it is a bit of a vicious cycle we are in!!
Click to expand...

It is a very difficult balance to strike that is for sure, best of luck. Let us know how you get on.
 
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