Reply to: UCFinance - helping IR35 status allegedly...

[eek]

But how does what you're offering help this in any way? There is no risk to the individual. PS: welcome.

I don't think risk is an issue here. Factoring an invoice shows you are doing something business like whether HMRC see that as a good or bad thing is up to them but factoring an 60 day term invoice to create working capital is probably a winner. Factoring a 7 day invoice is probably insane.


I like the idea. I'm not sure I would use them but I'm sure there are occasions when its worthwhile (60 day terms being 1 such case).

[Alan @ BroomeAffinity]

HMRC say – ‘individuals who risk their own money, by, for example, buying assets...and bearing the running costs and paying for overheads...are almost certainly self-employed’.

But how does what you're offering help this in any way? There is no risk to the individual. PS: welcome.

[JoannaUCF]

Hi Joanna,

Welcome to the forum! Would you say it is more of a short term service then and not intended as an on-going service?

Just asking as you specifically mentioned bridging possibly the first few invoice payments, and on the rare occasion, some new clients who have made the transition from permanent to ltd, do struggle for possiby the very first invoice payment.

Hi Nathan – thank you!

It’s certainly different from an overdraft, or other form of finance, that stays in place for the duration I guess.
We’ve deliberately set this up with no tie-in periods and no notice periods (again, unlike traditional factoring co’s!) – our clients stay with us for as long as it suits them, either from a financial perspective, when they’ve had chance to build up reserves, or from the fact that their business admin is taken care of.

Joanna

[JoannaUCF]

Hi Joanna. First off fair does for coming on here and facing people....

I can see how it might be useful for some people. After all as someone pointed out it appears cheaper than a payday loan at least. If people are happy with this then good luck to you...

The IR35 thing is a little bit naughty though. How is the contractor taking a financial risk here? Surely they're not but you are by paying out in advance of invoice payment?

Thanks Psychocandy!

What we offer is finance, specifically designed for freelance contractors, which until now has not been available from traditional lenders. Whilst there is undoubtedly a place in the world for payday loans, that’s not what we do. With a payday loan, you get a small amount of money, on high rates, against a payslip, and of course it’s personal lending. Timesheet Finance is business finance – at a cost of borrowing comparable to that of overdrafts (8% over base), and underpinned by a Contract for Services.

HMRC say – ‘individuals who risk their own money, by, for example, buying assets...and bearing the running costs and paying for overheads...are almost certainly self-employed’.

Joanna

[LisaContractorUmbrella]

Thanks Lisa, great question!

You’re right - our service is built on the basic principles of invoice finance. What makes us different though is that rather than funding invoices we’ve taken it a step back and, uniquely, can fund timesheets. Many of our clients are new to contracting, having made the transition from PAYE, and some have come from Umbrellas – they may not have been able to make this move if they hadn’t had access to cash. They are by no means desperate people – they just need finance to bridge the two or three months time period between first week worked, and invoice being paid.

This is a business service, as opposed to a ‘personal lend’ – again, unlike traditional invoice financiers, we undertake business admin too, right from valuable credit checks of prospective new agents/clients, to raising invoices and full collections.

Hope that answers your question?
Joanna

Thanks Joanna for your honest and prompt response but I like others on here would give a word of warning about the IR35 claims - factoring does not equate to securing a loan or finance for the business and it could be argued that using such a service would count against you in an IR35 review as you are actually lessening your financial risk

[psychocandy]

Isn't the risk the fact you are taking a loan out against invoices that haven't and might not get paid. So you are taking on a financial burden when the method or repayment might fail. That is all I can think of.

Suppose. But I was under the assumption that was their risk not yours. i.e. they lend you the money upfront and charge you a fee and take on board the risk of not getting paid.

Or do they tell you to cough up if the invoice subequently gets rejected?

[eek]

Bit of advice Joanna, don't push your claims regarding IR35 on this forum, you're very likely to get flayed by the regulars here.

And I'll let them...

And I would join in as the argument is incredibly badly worded. However, the idea of factoring outside an agency is a nice one as it puts a nice benchmark on the markup an agency can argue about.

If I can factor in an invoice for 3% why should an agency pocket 15% for doing little more after a renewal.

[cojak]

Bit of advice Joanna, don't push your claims regarding IR35 on this forum, you're very likely to get flayed by the regulars here.

And I'll let them...

[Nathan SJD Accountancy]

Thanks Lisa, great question!

You’re right - our service is built on the basic principles of invoice finance. What makes us different though is that rather than funding invoices we’ve taken it a step back and, uniquely, can fund timesheets. Many of our clients are new to contracting, having made the transition from PAYE, and some have come from Umbrellas – they may not have been able to make this move if they hadn’t had access to cash. They are by no means desperate people – they just need finance to bridge the two or three months time period between first week worked, and invoice being paid.

This is a business service, as opposed to a ‘personal lend’ – again, unlike traditional invoice financiers, we undertake business admin too, right from valuable credit checks of prospective new agents/clients, to raising invoices and full collections.

Hope that answers your question?
Joanna

Hi Joanna,

Welcome to the forum! Would you say it is more of a short term service then and not intended as an on-going service?

Just asking as you specifically mentioned bridging possibly the first few invoice payments, and on the rare occasion, some new clients who have made the transition from permanent to ltd, do struggle for possiby the very first invoice payment.

[JoannaUCF]

Welcome Joanna

Can you confirm that this is a basic factoring service whereby the invoices are purchased from the contractor at a price less than face value to improve their cash flow e.g. you will give them 95% of invoice value immediately and you will then receive payment of the invoice day 60?

Thanks Lisa, great question!

You’re right - our service is built on the basic principles of invoice finance. What makes us different though is that rather than funding invoices we’ve taken it a step back and, uniquely, can fund timesheets. Many of our clients are new to contracting, having made the transition from PAYE, and some have come from Umbrellas – they may not have been able to make this move if they hadn’t had access to cash. They are by no means desperate people – they just need finance to bridge the two or three months time period between first week worked, and invoice being paid.

This is a business service, as opposed to a ‘personal lend’ – again, unlike traditional invoice financiers, we undertake business admin too, right from valuable credit checks of prospective new agents/clients, to raising invoices and full collections.

Hope that answers your question?
Joanna

[Nathan SJD Accountancy]

Isn't the risk the fact you are taking a loan out against invoices that haven't and might not get paid. So you are taking on a financial burden when the method or repayment might fail. That is all I can think of.

That's what I was thinking. They are most likely able to recall part or all of the money from the contractor in the event funds are not received. Otherwise, the risk would lie with them and not the contractor.

[northernladuk]

The IR35 thing is a little bit naughty though. How is the contractor taking a financial risk here? Surely they're not but you are by paying out in advance of invoice payment?

Isn't the risk the fact you are taking a loan out against invoices that haven't and might not get paid. So you are taking on a financial burden when the method or repayment might fail. That is all I can think of.

[psychocandy]

Hi all

I'm Joanna from UC Finance - I thought I'd jump on here to see if I can answer any queries being chatted about in this thread.

With regards to the IR35 issue, for me, there is so much focus on this and so much concern and fear around 'am I self-employed or aren't I?', and possibly more importantly - 'what will HMRC think?', at last there is some positive news. Don't get me wrong, we're not suggesting that this will be a decisive factor, however a contractor paying for his own business finance is one of those smaller things, but they all add up!

We appreciate that this type of finance isn't for everybody, but we have many clients who do find all of our services very helpful.

On the matter of cost - we've specifically set this up to be in line with, if not cheaper than, traditional forms of bank lending.

I don't want to ramble on too much here, but if there are any queries at all I'll do my best to respond.

Hi Joanna. First off fair does for coming on here and facing people....

I can see how it might be useful for some people. After all as someone pointed out it appears cheaper than a payday loan at least. If people are happy with this then good luck to you...

The IR35 thing is a little bit naughty though. How is the contractor taking a financial risk here? Surely they're not but you are by paying out in advance of invoice payment?

[psychocandy]

From what I understood, dont you get it paid to you weekly? i.e. they pay 95% of it to you split over however many weeks until they then get the 95% of the invoice.

Sounds like a lot of hassle/cost to me just to get your money up front. Surely no-ones that desperate?

[psychocandy]

I still don't understand it - is it a loan to carry you over between invoice and payment?

How crap do you have to be at managing your business to need this kind of thing?

Yes dear. ;-)