Leveraging your balance sheet beyond the receivables during coronavirus

As coronavirus continues to curb cash generation, business owners may need to consider additional funding. For some, they may already have access to a bank overdraft, loan or invoice finance; but putting it bluntly, what if this isn’t enough?

As many business owners consider the eligibility criteria and application process for the various government support initiatives, they may also consider leveraging their balance sheet.

Here are five practical considerations for each balance sheet asset.

      Receivables (invoice finance)

A very common form of financing for UK businesses that meet the qualifying criteria (lenders prefer, but are not limited to, a ‘sell and forget’ type scenario.) You can receive up to 90 per cent of your unpaid invoices subject to:

  • Contractual invoices
    Are the invoices divisible and collectable?
  • Disputed invoices 
    What is preventing the customer from paying?
  • Ageing invoices 
    Is the customer unwilling or unable to pay?
  • Dilution of invoices
    Could a customer offset against the invoice?
  • Sale or return or warranties 
    Are there contractual clauses preventing payment in full?

Clearly during coronavirus, a lack of new invoicing and debtor receipts can restrict cash generation; but some receivables lenders will consider leveraging other assets to underpin their exposure. Lenders have also adapted their approach during coronavirus to include remote client meetings, desktop sales ledger surveys and the electronic signing of legal documents.


Whilst the traditional UK lenders often view inventory as more challenging to leverage, the emerging ABL’s and ABL debt funds focus heavily here to differentiate themselves. Lenders primarily consider the speed and cost of converting inventory into cash when considering whether to lend; this can be driven by:

  • Stock mix
    Is it raw materials, work in progress or finished goods and how quickly can it be sold?
  • Terms of supply
    Could suppliers’ retention of title clauses be enforced?
  • Seasonality & branded goods
    Could this prevent an accelerated sale?
  • Landlords waiver
    Can the inventory be accessed?
  • Stock management system
    Can items be readily identified and located?

The introduction of HMRC’s secondary preferential status may restrict the levels of finance generated by this asset class; but some lenders may consider a heightened advance rate against the receivables by using the inventory as additional security.

      Plant & machinery

Often considered more straight forward to finance based on the individual assets purchase price or current value, useful life and residual value. Lenders will consider:

  • Hard assets
    i.e. plant, machinery, equipment, vehicles
  • Soft assets
    i.e. IT software, production equipment, office fit outs
  • New or used?
    What could be the resale value, if any?
  • Are the assets readily identifiable?
    Ensures the lender has security.
  • Are the assets mobile or in situ?
    What is the recovery cost?

Lenders will consider financing from new to ease cash flow, as well as the re-financing of existing assets to generate new money. Asset schedules can often allow lenders to undertake a quick desktop valuation and provide an early indication of facility terms.


Coronavirus' effect on the property market is unknown; however, lenders still view bricks and mortar favourably. Lenders will consider commercial premises, investment property and land, focussing on:

  • Is the property freehold or leasehold?
    Freehold or long lease is preferable.
  • Has the property been recently valued?
    Accelerates the process.
  • What is the use of the property?
    Business use is ideal.
  • What is the condition of the property?
  • Is there associated planning permission on the land/property given an alternative use?

Similarly, to inventory, lenders are open to using property as additional security underpinning working capital funding, or to enhance short term liquidity.

      Intellectual property and trademarks

Historically, balance sheet intangibles have often fallen outside the basket of assets considered for funding. However, among others, emerging ABL debt funds have a progressive approach towards this asset class including:

  • Patents
  • Trademarks
  • Copyright
  • Licences
  • Hidden secrets

Specialist valuation agents are adept in this arena, and lenders may view these assets critical to underpinning future cash flows or as carrying realisable value as part of a sale.

We can help

Our experienced advisers can help you with all the areas mentioned above. And if your current finance arrangements no longer provide you with sufficient funding, we can help you consider and secure alternative options.

For more information, please contact

Matt Haw Matt Haw


Diana Fragnou Diana Frangou


Chris Ratten Chris Ratten