Builders’ Merchants and Trade Counters with more than £50,000 of unpaid invoices could benefit from a new scheme that buys those invoices for cash, turning a potential bad debt write off into positive cashflow.
Finance provider Azzurro Associates is looking to provide cash against at least £1 billion of UK businesses’ unpaid invoices to help ensure much needed liquidity during and beyond the current Covid-19 crisis.
It is especially targeting Builders’ Merchants and similar building supplies companies with between £50,000 and £10 million in unpaid bills for which it will not only provide upfront cash, but also share in the collections it achieves on any outstanding debts.
Azzurro Associates’ new commercial debt solution differs from ‘traditional’ invoice finance in that the former advances cash against invoices that are still within term (i.e 30 days), whereas Azzurro provides cash for debts that are overdue or delinquent, and that a business is struggling or has failed to collect.
Andrew Birkwood, CEO of Azzurro Associates, believes this is the first time that companies in the B2B sector have been able to benefit in this way: “As Covid-19 leads to more businesses failing to pay their suppliers, businesses further up the supply chain need to make sure they don’t run out of cash,” he says.
“When collections activities are exhausted, the only option left is the Courts, but this costs money, takes time, and there is still no guarantee you’ll get any money at the end. Now Financial Directors have a better option – a way of generating immediate cash from bad debts to avoid an inevitable coronavirus cashflow crunch.”
The firm purchases invoices up to a maximum of six years from the due date, paying anything up to 30% of the original invoice value depending on the age of the debt and the credit profile of the debtor. In addition, it shares a proportion of the collections it achieves, which can be as much as 50%. It buys portfolios of all sizes from £50,000 and above, which may comprise a small number of large invoices or a large number of small invoices, provided the smallest invoice value is greater than £100.
Authorised and regulated by the Financial Conduct Authority (FCA), Azzurro adopts a fair and balanced recoveries process, with a creditor’s brand reputation being of upmost importance. This is achieved by utilising credit reference agency data to determine the appropriate servicing strategy, allowing forbearance and breathing space where required. Where customers do not engage in the amicable contact strategy, the company uses a combination of bureau data and the expertise of a panel of preferred collections partners to ensure only the right cases are selected for litigation.
Interim Small Business Commissioner Philip King, whose office champions fair payment practices and supports businesses looking to resolve payment disputes, says that cashflow is critical: “At times like these we need creative ideas and I’m delighted to see organisations like Azzurro introduce different and innovative solutions.”
