This was a complex case, and a decision needed to be made that would recover the Funder’s position to a point where the Funds Out and real value of the Ledger at least matched, otherwise a large write off would be required.

In discussion with the Funder it was agreed that a substantial verification exercise would take place. Collections would be monitored closely, and all new invoices being uploaded would be scrutinised to ensure they were correct. The Client was left to believe that their story surrounding the Ledger had been accepted.

Only Critical payments would be allowed and the Client was given Notice of Termination and told to look for an alternative Funder, as well as the majority shareholder being expected to fund the business in the interim period.

Within 3 months of our initial involvement, all invalid invoices had been written off, new invoices uploaded were correct and the Funds in use had been reduced from £2.7m to £600K while the Ledger had been tidied up and now reflected the true value owed to the company.

This resulted in the business being far more attractive to alternative Funders, and the client was managed away and our Funder Client was repaid in full.

We cannot stress enough that if we had pushed for the Collect Out (for which we had already agreed a rate), then our Client would have lost money, so it was not the right thing to do. 

As a result, we were paid for the verification and other work, but it was a fraction of what we would have earned through a Collect Out. It is more important to us that our Funder Client obtained the best possible outcome, and we will always work in our clients’ best interests, even if it means a lower Fee for us.