Pending Bills

Pending Bills- Debt Factoring

Suppliers sell its accounts receivables to Meridian Acceptances Limited (MAL) at a discount, enabling companies to immediately unlock cash tied up in unpaid invoices without having to wait the usual payment terms or longer periods.

Debt factoring allows suppliers to unlock cash from your B2B invoices in a matter of hours.

Unpaid receivables are expensive! They take up a large share of capital and resources. In addition to the financial risk for your company, processing and monitoring these receivables demands significant accounts receivable management. Particularly as the age of the receivable increases more intensive measures are required, which drive internal and external costs.

The sale of such claims is a real alternative. You minimise your accounts receivable management demands, and at the same time benefit from an immediate inflow of

liquidity. Because the purchase price is paid immediately upon contract conclusion, regardless of our collection success.

We will support you with the implementation process: starting from the tax treatment to handling direct payments, take backs in special cases you deem necessary and finally to winning your customers back.

How does debt purchase work?

MAL will chase the debtors for payment of the invoices and collect the full invoice payment from your customer.

The business will be given up to 90% of the invoice value almost immediately from the point of submitting and approved invoice, therefore reducing the cash deficit for the small business.

A supplier may choose to Meridian a portion or all of its invoices. First it approaches the ‘factor’, a financial institution or lender who specialises in accounts receivable finance.

Meridian assesses the level of risk by looking primarily at the financial health and reliability of the companies owing the invoices. Based on this analysis they then make a quote regarding what percentage of the invoices they can factor (up to 90%), and the terms are drawn up. Once the agreement is signed, the lender advances most of the money straight away with a small proportion held back until the invoice has been paid.

Please do not hesitate to contact us. We would be happy to make you an individual offer for your portfolio across all your suppliers.

IS MERIDIAN DEBT FACTORING RIGHT FOR YOUR CIRCUMSTANCES?

Please note that Meridian debt factoring is a long-term commitment and should never be rushed into without taking our advice.
Meridian company collects the debts owed to a business based on the approved invoices submitted and provides payment upfront within 24-48 hours of invoice approval.
We act a bit like a debt collection agency for businesses of all sizes and industry sectors
Our structure can be used to improve cash flow for business owners who can’t wait 60-180 days to be paid. The customer then pays the Meridian X – Days later
We buy invoices that have been approved and then allow a business to draw funds against the money owed to the business.
We will process the invoices and allow you to draw funds against the money owed to your business.

Advantages of debt factoring in general:

Improved cash flow – release money tied up in unpaid invoices and boost your cashflow
Save time- relieve your business of the burden of credit control and concentrate on your core business
Bargaining power – debt factoring can help you to negotiate better terms with your suppliers
Faster growth – grow your business at a much faster rate due to the flexible funding line
Speeds up the working capital cycle
Saves time for administrative resources
Non-recourse factoring protects you against bad debts

PROS for Public Sector Buyers

Purchased payables are reclassified under Non-Current Liabilities
No mandatory obligation to obtain consent from existing lenders
Frees-up short-term operational cash for future infrastructure investments and thus liquidity optimization
Improves relationship quality between GoK/State Owned Enterprises (SOEs) and its suppliers
Straight-forward supplier finance structure
Future Capex purchase agreements can be contracted to accommodate a payables purchase option
Provision of alternative sources of funding with no uptake of additional traditional debt
SOEs faces financiers on a clean basis
Significantly improves performance against existing lenders’ financial covenants

PROS for Public Sector Suppliers

Supplier(s) will raise financing against a strong credit rating of GoK and approved SOEs and thus lower implied cost of funding than would have been obtained on their own.
Supplier(s) will achieve working capital optimization and improve their cashflow forecasting and flexibility.
Facility will enable the Suppliers to manage longer payment terms.
Suppliers can regularize their operations.

Pending Bills

Pending Bills- Debt Factoring

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