Non-Bank Finance

Since mid-2013, more than €10.0m of working capital has been provided to the numerous Irish micro-medium sized businesses trading on Credebt Exchange®.  Instead of using traditional lenders, savvy business owners choose to sell their invoices on Credebt Exchange® because it is more convenient, straightforward and less costly.

Dealing with traditional lenders like banks, factoring or invoice discounting companies is both time consuming and costly. In addition, because the business owner is borrowing, there are endless requirements for documentation coupled with onerous liens and personal guarantees.  Regularly, due to the circumstances of the business owner, the personal guarantee is insufficient and funding is refused.  When all of these factors are combined with stringent lending criteria, the outlook for business borrowers continues to look bleak.

The decline in funding and overdraft facilities available from traditional lenders has resulted in several innovative newcomers.  These new non-bank finance providers are slowly changing the business landscape by meeting explicit, once-off funding requirements. Operating in niche sectors of the market, the importance of these new providers has largely been ignored by the establishment.

Some non-bank providers specialise in either short or long-term lending with others preferring to offer project or venture based lending.  Online platforms have also emerged that offer supply chain finance, ad-hoc invoice based lending and receivables discounting too.  Notwithstanding the importance of these new non-bank providers, a viable alternative to the bank overdraft or invoice discounting facility is still a primary requirement.

The overdraft or invoice discounting facility is an essential tool for most businesses. Where non-bank lending or ad-hoc trading in invoices may improve cash flow, it lacks certainty.  Business owners need absolute certainty on the availability of working capital to ensure continued operational success.  Nowhere is this more prevalent than in the micro-medium sized business sector.

Where these innovative non-bank finance providers can solve some liquidity issues, they do not offer, or attempt to replicate, the certainty provided by an overdraft facility.  Also, shrewd business owners will quickly identify that the fees and annual interest charges of 12-25% rule out the possibility of regular use.  In response to this, an alternative to the traditional overdraft or invoice discounting facility quietly entered the market last year.

The Credebt Exchange® non-bank finance replaces the overdraft seamlessly by providing intelligent finance with certainty.  As opposed to a lending model, the Exchange uses a selling model that dispenses with the liens and frustrations of the lending industry.  As a wholesale marketplace with both buyers and sellers, Credebt Exchange® is charged with ensuring liquidity and affordable funds availability.

Buyers on the Exchange are Investors with excess capital seeking a yield and business owners, as the Originators of invoices, are the sellers.  Credebt Exchange® negotiates and strikes deals on a daily basis by matching Investors’ buy to Originators’ sell orders.  To manage an orderly market, Originator sell offers are filled according to specific funding allocation dates that are published on the Credebt Exchange® website.  On each allocation date the Exchange agrees to provide the Originator’s total annual working capital requirement and thereby provides the funding certainty they need.

The working capital requirement of the Originator dictates the total value of invoices they must sell in any given year.  Unlike traditional lending models, the Originator is not required to sell their ‘whole book’ and nor do they provide any liens or personal guarantees.  The Originator simply selects the Debtors whose invoices they wish to sell and Credebt Exchange® buys them on behalf of Investors on the Exchange. As a percentage of turnover, funding costs tend to be 0.5% – 5.0% per annum.

With the Exchange projecting trade of €35.0m by year end, this is a compelling alternative to the overdraft or invoice discounting facility.  Any micro-medium sized business owner in need of working capital should certainly consider this new non-bank finance as an option.  Providing intelligent finance in today’s market without the need for liens or personal guarantees is a welcome and well-conceived alternative. Credebt Exchange® is quietly maintaining its orderly market whilst also having the potential to disrupt the traditional lending market beyond recognition.

Calculate Working Capital

If a company takes all of its short-term assets (e.g. cash in the bank, receivables invoices, stock, etc) and pays all its short-term liabilities (e.g. suppliers, staff, etc) the remaining balance is their working capital position.  If the working capital position is positive, it is more than likely that the company is adequately capitalised and is self sufficient.  If however, the working capital position is negative, then the company needs to make up the difference by borrowing money or using some other source of working capital.  To calculate the working capital of a business, simply subtract its Current Liabilities from its Current Assets.

Working Capital = Current AssetsCurrent Liabilities

Knowing the working capital of a business will help to avoid unnecessary financial strain on the company.  Companies with insufficient working capital will invariably delay payments to suppliers, fail to pay staff salaries, delay tax payments and may ultimately lead to business failure and/or closure.   A useful measurement of the financial health of a business is its working capital ratio.  In a financially stable business, the working capital ratio will be above 2.

Working Capital Ratio = Current Assets / Current Liabilities

For example, a company with current assets of 100,000 and current liabilities of 40,000 has working capital of 60,000 and its working capital ratio is 2.5. Working capital ratios below 2 are an indication that there may be a potential financial problem.  A company with a working capital ratios below 2 needs to address the issue swiftly by borrowing money or using some other source of working capital.

Finding your Current Assets & Current Liabilities

Go to your accounts system and print your Balance Sheet, or ask your accountant for a recent Balance Sheet. Current Assets is a standard heading on most Balance Sheets. There may be a Current Liabilities heading and if not, there should be a heading: Creditors – amount falling due within one year and this is your Current Liabilities.


Low Cost Capital

Exchange Overview
Credebt Exchange® provides an unrivalled and unique form of Low Cost Capital specifically for organisations in the micro-medium business sector. The Exchange model is substantially different from any other type of traditional working capital/lending model. A summary of the principal differences is highlighted below:

  • Selling model, as opposed to a lending model
  • No liens & no personal guarantees
  • Low discount rates & no ‘face value’ charge
  • Access up to 90% of your invoices’ value quickly
  • Single Membership fee, regardless of volume
  • Payment terms can be greater than 90 days
  • Not required to sell all invoices/entire ‘book’
  • No long term contract & leave at any time
  • No ‘Debtor Concentration’ (i.e. no maximum value per Debtor)
  • Block trading & trade automation are possible
  • No retrospective, refactoring, or review fees
  • Simple, streamlined online reporting

Grow Your Business
If accessing your working capital quickly and easily is essential to growing your business, then Credebt Exchange® can help you access the capital ‘locked’ in your invoices now. We convert your invoices into Exchange Traded Receivables [ETR] for sale on the Exchange. ETR offer the best Low Cost Capital and most efficient cash flow solution in the market today.

Your Way
Credebt Exchange® Low Cost Capital uses a unique purchasing/true sale, legal assignment model. You are not borrowing money, you are selling your invoices/ETR. Selling your invoices/ETR dispenses with the onerous requirements associated with traditional lending. As a Member of the Exchange, you only sell what’s needed to meet your capital requirements.

Take Control Now
Take control of your cash flow today and apply for Membership by email using the form below. Priority applications can be processed online or by telephone on 01 799-5499

Low Cost Capital


Welcome to Credebt Exchange Blog

Credebt Exchange® enables service and goods providers to offer their invoices as Exchange Traded Receivables [ETR] for sale on the Exchange. These ETR are attractive to Investors and when purchased on the Exchange, this provides Alternative Working Capital to the Originator/seller. A key objective for Credebt Exchange® is to achieve rates that are comparable to, and preferably less than, other commercial finance lending rates. By selling ETR, the trading organisation is avoiding the need for loans and/or credit facilities by using the ETR to provide Alternative Working Capital