Philip Monks established Aldermore in 2009, just after the banking crisis changed the lending landscape. He realised that restrictions on bank lending had created a gap in the market for a financial institution focused on providing financial solutions to small and medium-sized business. Monks was right and the company grew rapidly, posting its first profits two years later. The company went public in 2015, the same year that Credit Today named Aldermore ‘Invoice Finance Provider of the Year’. To date, the company has lent over £2.7bn of funds to 56,000 business customers. Invoice factoring is one of the central pillars of Aldermore’s success.
Features of Aldermore’s Invoice Finance Service
Aldermore trades via intermediaries such as brokers, accountants, business advisers, and equipment manufacturers. It has a healthy appetite to new clients. Once connected to Aldermore, factoring clients will have a dedicated Relationship Manager, though most of the transactions, such as sending invoices, occur online. Credit decisions can be expected within 48 hours of document submission, with 90% payable on invoices and funds cleared within 24 hours of approval. Risk control is available via recourse factoring – where companies pay more, but insure against non-payment. Because Aldermore also has a successful debt recovery business, this expertise can be made available to factoring clients of all kinds.
Appetite for Lending
Because Aldermore began life after major problems hit the banking industry; it is unencumbered by a history of bad risks and big losses. It has a better appetite for lending than many of its competitors, backing small and medium businesses, and is currently approving 9 out of 10 applications. In a sense clients are already vetted by the experts referring them. However, this appetite for lending is also because Aldermore has grown rapidly and is well capitalised. Its intentions to continue growing mean that it is actively looking for clients.
Once clients have been referred, Aldermore will assign them a dedicated Relationship Manager from one of eight locations across the UK. One of the keys to the success of the Aldermore approach is that decisions are people focused, but execution, such as managing documentation, is largely online. The emphasis is on convenience while at the same time, building long-term relationships. Agreements are tailor-made and dependent on the needs and circumstances of individual clients. This is excellent news for businesses that have been rejected by more conventional lenders.
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Because Aldermore is a relatively small and fully independent entity it can process decisions quickly. The high acceptance rate means a healthy flow of clients, and decisions are usually processed within 48 hours. The simplicity of Aldermore agreements and the transparency of charges and processes also make for speedier client processing.
Aldermore also has a debt recovery arm, which means that running credit checks on client’s benefits from this expertise and invoices can be processed faster. With know-how in a number of business sectors, Relationship Managers are able to evaluate each business from within the context of its industry. This is another way in which they are able to offer invoice factoring services to businesses that other factors refuse.
Convenience, Flexibility and Protection
The convenience of the online platform allows for the rapid assessment of invoices, as well as the processing of other paperwork. The platforms also allow businesses to track the status of their applications. The individual approach to each factoring agreement offers a lot of flexibility, and knowledge in debt recovery means that Aldermore can leverage existing debt recovery expertise. Though each agreement is different, invoice factoring falls into two camps: recourse and non-recourse. Aldermore offers both options, leveraging their debt recovery expertise.
- Recourse factoring – whereby you are liable for any invoices that the client cannot pay.
- Non-recourse factoring – whereby the factor will be liable for debts on uncollected invoices, for a price.
Debt Recovery Experts
One of the risks of invoice factoring is that you hand over client contacts to the factor. Having possibly spent years nurturing business relationships, no business wants a heavy-handed factor to put those relationships at risk. Aldermore can offer a ‘ghost’ factoring service, where the client need not necessarily know that payment reminders, for example, are coming from a factor. In addition, when it comes to tackling clients who cannot pay, they have highly evolved debt collection processes. These resources are also available to recourse factoring clients.
To be eligible a company needs to show an annual turnover of over £250,000 – though sometimes it can be lower under certain circumstances and with some negotiation. As with any other factoring arrangement, the business must be UK registered and active in the business-to-business sector.
What Business Model do they Suit?
Aldermore invoice factoring is good for small and medium-sized businesses, particularly those selling services on credit, or involved in complex operations. Emphasis is on growth, so they are more favourable to businesses that are looking to expand than those who are simply ticking over. They also have sector specific expertise, covering the following industries:
- Business services providers
- Employment and recruitment agencies
- Engineering companies
- Haulage and transport firms
Because agreements are individually arranged, Aldermore do not provide specific pricing. They are, however, listed elsewhere as 1.5% - 3% above base rate for the 90% advance on invoices, an initial ‘arrangement fee’ and then between 0.25% and 3% of annual turnover. Aldermore is keen on transparency of operation and all charges will be listed on the facility offer, made when the Relationship Manager and the client have selected the best options. An additional ‘Client Guide’ will list any other ad hoc fees that may cover any additional services required, such as debt recovery. Find out more about the costs and fees associated with Invoice Factoring.
Help and Support
Aldermore has a part of their website where unedited reviews show that the company is doing well in terms of customer satisfaction – awarding them 4.5 stars out of 5 available. They have an online customer service charter, which pledges to address your requests quickly, offer advice in plain English and support your business for growth.COMPARE PRICES