Diaspora worked with a UK-based elderly care provider provides services to care homes run by local councils and the national healthcare service. It currently sends carers and nursing staff for care homes, and provides a reconciliation of service hours provided and an aggregated invoice to the national healthcare service at the end of each month. Standard payment terms are 30 days from invoice date.
The problem: the company’s monthly expense and wage obligations are £125,000. By the time the company receives the payment of its invoice, as much as two months after services were provided, it will have a pipeline of invoices outstanding totalling £250,000. As a result, the company requires working capital of £250,000 at all times to ensure everything is paid on time whilst waiting on payment of its accounts receivable. The company may not be able to accept any new business unless it increases its capital, which will be difficult to achieve if all of its cash is tied up in serving its current agreement.
Solution: Invoice finance By leveraging the power of invoice finance, Company A can free up liquidity and put it to work to grow the business. Through this solution, Company A was able to upload its monthly invoice on the date of issue to the DiasporaFinance platform, which enabled it to access instant liquidity to pay wages, rent, and accept new business.