1. Invoice F inance - E xp laine d
D avid We b b
Bib b y F inancial S e rvice s

2. Age nd a
• Invoice F inance E xp laine d
• B as ic crite ria
• P rod u ct ove rvie w – h ow it works
• C om p aris on to oth e r form s of finance
• Wh at we ne e d to as s e s a d e al
• D e al te rm s
• Working toge th e r
• C ontractu al F inance – Th e C ons tru ction Ind u s try
• Working inte rnationally

3. Bas ic Invoice F inance C rite ria
• Bu s ine s s to Bu s ine s s
• C om p le te d Works (C ons tru ction an e xce p tion)
• Invoice d in Arre ars
• Te rm s of Trad e offe re d
• S o h ow d oe s it work?

4. Invoice F inance P rod u cts - jargon b u s te rs
• F actoring
• D is clos e d - Th e clie nts cu s tom e rs are aware of th e factor
• C onfid e ntial - Th e clie nts cu s tom e rs are u naware of th e factor
• R e cou rs e - Any los s e s d u e to cu s tom e r failu re to p ay are at
clie nts ris k
• N on re cou rs e - Bad d e b t p rote ction is inclu d e d with in facility
• CHO CS - C lie nt p e rform s own cre d it control fu nction
• Invoice D is cou nting
• Disclosed - The clients customers are aware of the discounter
• Confidential - The clients customers are unaware of the discounter
S e e fu ll ind ivid u al p rod u ct d e s crip tion m ate rial

5. Wh at we ne e d to as s e s a d e al
• E xe cu tive s u m m ary
• Age d d e b tors and cre d itors analys is
• F inancials (m os t re ce nt accou nts , m anage m e nt figs )
• E xam p le Au d it Trail (P u rch as e ord e r th rou gh to invoice )

6. Te rm s of th e d e al
• S e cu rity – D e b e ntu re , F actoring Agre e m e nt, P .G ’s
• Ad vance Le ve l – P e rce ntage ad vance agains t invoice s
• C os t and typ e of C h arge s – S e rvice F e e and D is cou nt %
• C ontract le ngth - P e riod of agre e m e nt

7. P op u lar Ind u s trie s for Invoice F inance
• R e cru itm e nt
• Trans p ort
• P rinting
• M anu factu ring
• D is trib u tion
• Bu s ine s s S e rvice s
• C ons tru ction

8. S u cce s s S torie s
• R e cru itm e nt
• Trans p ort
• P rinting
• M anu factu ring
• D is trib u tion
• Bu s ine s s S e rvice s

9. How does invoice financing measure up?
F u nd ing com p aris ons
Invoice finance As s e t b as e d le nd ingO ve rd raft Loan
(F actoring and
invoice d is cou nting
)
Am ou nt of cre d it U p to 90% of you r F rom 60% - 80% By ne gotiation – By ne gotiation
availab le invoice s availab le of th e as s e t s om e tim e s lim ite d
im m e d iate ly. T h e valu ation to 50% of b ook
b alance (m inu s ou r d ebt
fe e s ) is p ayab le
late r
F le xib ility You r facility m ay F or s tock, th e Lim its can b e F le xib le b u s ine s s
grow in line with am ou nt availab le incre as e d , b u t th is loans allow e arly
you r s ale s m ove s in line with incu rs e xtra cos ts . re p aym e nts
you r b u s ine s s Typ ically re - with ou t p e naltie s
ne gotiate d once a
ye ar
S e cu rity re qu ire d O n you r invoice s Typ ically, s e cu rity Typ ically re qu ire s Typ ically re qu ire s
and in s om e is only re q u ire d on s e cu rity, wh ich s e cu rity, wh ich
cas e s , m od e s t th e as s e t m ay inclu d e a m ay inclu d e a
p e rs onal ch arge on p rop e rty ch arge on p rop e rty
gu arante e s and /
or frau d warrantie s

10. Working Toge th e r
• C om m is s ion p ayab le

11. Any Q u e s tions ?

12. F u nd ing in th e
C ons tru ction S e ctors

13. Th e U K C ons tru ction Ind u s try
• UK larges t indus try s ec tor
• E mploys over £2m people
• £100bn of turnover
• E very £1 s pend in c ons truction = £2.84 inc reas e in UK G DP
• Hard hit by rec es s ion in las t 24 months
• G rowth dependent on G ovt inves tment (but whic h party? !)
• 2010 – looks more pos itive
• Various tiers of c ontrac tor / hundreds of S ME contrac tors

14. Wh at is C ons tru ction ?
C ons is ts of various s ectors (with numerous trade bodies ):
• R e tail, O ffice s , Ind u s trial
• U tilitie s , R oad s , R ailways
• S ocial H ou s ing
• G ove rnm e nt P roj cts e
• S p e cu lative D e ve lop m e nts
Within thes e individual s ectors there are:
• N e w Bu ild & R e fu rb is h m e nt P roj cts
e
• M ainte nance , R e p air & R e fu rb is h m e nt P roj cts
e

15. H ow d oe s th e ind u s try work?
Projects are contracted out in a chain or pyramid, for example :
3. The Olympics Development A uthority (ODA )
5. Main C ontractor (Laing O’Rourke)
7. S ub C ontractor (Often B ibby C lient)
9. S ub-S ub C ontractor (Often Bibby C lient)
The chain can go down many more tiers depending on the project

16. Ind u s try C ontracts – Th re e m ain F orm s
1. Lump S um Main C ontracts
• S ubject to monthly valuation and certification
• Lump S um S ub C ontracts
S ubject to periodic valuation and certification can take s ome weeks
• Term Main C ontracts or S ub C ontracts
C ontracts let for a period of time and can be for many years

17. Is s u e s with fu nd ing th e cons tru ction s e ctor
C ons truction is not a s ector favoured by the mains tream banks or indeed
the invoice finance indus try (except Bibby!)…….but why?
• Not always eas y to unders tand / as s es s ris k on nature of trade
• Long term contracts with onerous claus es
• Debt is not “ s ell and forget”
• C omplexity of the debt – contractors often run more than one ledger
• Interim billing that may only be an approximation
• Management of contracting ledgers internally
• S ubject to UK C IS S cheme
• S tandard indus try deductions – retention, MC D, C IS tax

18. C ons tru ction F inance P rod u ct – D e finition
Funding to contractors by offering a
percentage advance (up to 70%) agains t
invoices and/or uncertified applications
for payment throughout the life of a
contract and/or order

19. P rod u ct O ve rvie w
• Releas e of funding agains t uncertified applications
• C onfidential, i.e. cus tomers not aware of B ibby’s involvement
• Funding complimentary with mos t indus try contracts
• Fas t track product for s maller contractors
• S pecialis t B ad debt protection
• Dedicated management unit

20. H ow d oe s it work?
1. Review of contractor bus ines s by B ibby s pecialis t B DM and/or QS
2. Gain clear unders tanding of trade s ector / billing proces s es
3. A s s es s funding need
4. A s s es s our advance level agains t applications (bas ed on s ector / ris k)
5. A dvance up to 70% agains t uncertified applications (often confidentially)
6. Manage client in dedicated cons truction team
7. S hadow running of client contracts by our team = vis ibility / trans parency
8. E mbrace the s ector in which our clients operate
This all res ults in fully informed “ indus try” advis ed lending into the cons truction
s ectors

21. Wh o can we h e lp ?
• C ontractors from s tart up to £50m+ turnover
• Funding Requirement up to £3m
• Mos t indus try s ec tors where we advanc e agains t billing
• G rowing c ompanies with additional working capital needs
• Often operating on res trictive bank or fac toring / ID fac ilities

22. Wh at d oe s a typ ical C ons tru ction clie nt look like ?
• S ub contractor working for a main contractor / employer
• Operating under s tandard indus try contracts and C IS S cheme
• S ubmits weekly / monthly applications & waits an age to get paid
• Has a working capital need not being s olved by exis ting provider
• Needs a more flexible “ indus try led” funding product

23. Wh at s e ctors h ave we fu nd e d ?
• Plas tering & Drylining
• Painting & Decorating
• E lectrical
• C eilings & Partitions
• S upply & Fit (Bathrooms , kitchens etc)
• S hopfitting
• Double Glazing
• C ommercial Tiling
• S caffolding
• A ir C onditioning & Ventilation
A nd many others ………

24. F acility te rm s
• A dvanc e Levels
• S ecurity
• A greement Length
• C harges

25. C ons tru ction F inance In Action
£16m Turnover Refurbis hment C ontrac tor - £500k C o nfid e ntial C ons tru ctio n F inance F acility
R e finance from e xis ting fu nd e r p rovid ing ad d itional working cap ital facilitie s agains t u nce rtifie d
ap p lications for p aym e nt to facilitate b u s ine s s growth and p aym e nt o f s om e h is toric trad e
cre d itor b alance s
£15m Turnover E lec trical C ontrac tor £500k C onfid e n tial C ons tru ction F in ance F acility
-
R e finance from e xis ting fin ance p rovid e r incre as ing workin g cap ital facilitie s agains t invoice s
and ap p lication s for p aym e nt to s u p p ort th e financing of ne wly won co ntracts
£1m Turnover Painting & Dec orating C ontrac tor - £1 00k C onfid e ntial C ons tru ction F inance
F acility
Incre as e d facility ove r e xis ting b ank ove rd raft to p rovid e ad d itional wo rking cap ital
to e nab le contracts to b e te nd e re d for and u ltim ate ly s e cu re d