Location: West Sussex
Our client is a provider of residential care workers that visit clients in their own homes. Our clients customers were local authorities and unfortunately they were very slow to pay and in the meantime our client had to pay the carers on a weekly basis.
This is often the case when dealing with the public sector. They are obviously good for the money but it can take a long time to get paid. This was causing our client considerable cash flow issues and it was also restricting growth. Without the necessary financial solution in place there was no way they could seek more placements.
We met with the client and did a review of the business. Their knowledge of the sector was excellent and their carers had a very good reputation. The business was profitable and in theory should have been providing a good living for the owners. Unfortunately the cash flow had been neglected. We did a cash flow forecast and demonstrated that the only way to survive was with some form of invoice finance. We talked our client through their options and spoke to several suitable lenders.
We decided that a CHOCS facilty (Client Handles Own Collections) was the most suitable type of facility. We ensured it was structured with a large concentration limit so that funding would not be restricted due to their reliance on one local authority. We also ensured it was priced competitively so that it was a cost effective solution.
Our client is now able to push for more business both with the local authority it currently works with, other nearby local authorities and care homes and is also looking to open another branch in another geographic area. They are growing safe in the knowledge that their factoring facility provides adequate working capital at the right price. Importantly it has been structured so that there will be no funding restrictions that could impede growth.