100% Concentration
100% concentration is when you have a single debtor. Most factoring companies like to see a spread of debtors and will impose a concentration limit of let's say 50%. That means they will only allow any single debtor to be 50% of the ledger.
However, there are lenders out there who are more than happy to finance a single debtor.
If you have a 100% concentration/single debtor or you have a debtor that really dominates your ledger it is imperative you structure your facility accordingly. If a concentration limit set by a lender is set too low for your business it will have a huge impact on the amount of cash your invoice finance facility can generate. You may think that a lender will simply increase it but unfortunately some lenders have very strict rules regarding concentration and will not adjust upwards. If you have signed up for a lengthy contract this could have severe issues for your cashflow or you could end up paying hefty termination fees to leave early.
Our advice is to structure any facility properly from the outset. We will gladly talk over your requirement and advise what areas you need to focus on.
