Demystifying asset-based lending

Ian Flaxman, Managing director, Working Capital Solutions

Do you know the difference between “approved payables finance”, “reverse factoring”, “vendor pre-pay” and “contract monetisation financing”?

Those of you that spotted this is a trick question are correct.  Those expressions all mean the same thing, though it may not be immediately clear what that is.

One of the challenges in financial services, as in many professions, is the use of jargon.  Used well technical terminology can, for instance, help doctors understand subtle differences between different conditions, and those differences will be critical in how the patient is treated. 

Used badly, jargon can simply confuse and create barriers with customers, which can put them at a disadvantage.  The use of jargon can make it harder for customers to understand what they are looking for or buying.  That can make it difficult for them to know if they are getting good value or even the right solution.

Our own research of 37 financial services providers of working capital solutions, shows that companies use nearly 30 different terms for just three financial products.

Receivables finance has the highest number of synonyms used with some 21 different names.  Meanwhile trade finance has five different names.  Inventory finance is the least confusing product and is given just one other name.

These relatively simple concepts do not need so much jargon around them.  Jargon is confusing.  Jargon does not differentiate through innovation, but through confusion. 

We believe the industry should apply the same definitions around each of the core products, doing more to help customers understand.

Here is what Wyelands Bank would like to see, under the umbrella term asset-based lending and the synonyms used by companies researched: 


Asset-based lending is an umbrella term covering a range of products in which a funding line is secured against a combination of a business’s assets including debtors, stock, plant, machinery and property.

Our definition


Receivables finance

A funding facility that is secured against invoices (whether a single invoice, a block or the whole turnover) or against bills of exchange

1.    Cash flow finance

2.    CHOCS (customer handles own collection service)

3.    Commercial finance

4.    Confidential invoice discounting

5.    Construction finance

6.    Contract finance

7.    Cross border finance

8.    Disclosed invoice financing

9.    Discount facilities

10.  Factoring

11.  Forward financing

12.  Inspired cashflow

13.  Invoice discounting

14.  Invoice factoring

15.  Invoice finance

16.  Payroll finance

17.  Receivables securitisation

18.  Recruitment finance

19.  Secured finance

20.  Select invoice finance

21.  Asset finance (invoice financing listed as)

Trade finance

A buyer led programme that supports the supply chain (whether on a single transaction, a block of them or on a revolving basis), enabling the purchase of goods for confirmed orders from credit worthy buyers.

1.    Purchase finance

2.    Purchase order finance

3.    Supplier finance

4.    Trade solutions

5.    Trade, import and stock finance

Inventory finance

A revolving line of credit or short-term loan that is secured against stock

1.    Stock finance


As can be seen, many of the terms used are slight variations of a core product or labelled to appeal to a particular sector.

But few customers have the time or expertise to pore over the subtle distinctions between seemingly similar services.  Rarely are they experts in the finance industry and nor should they have to be.

Making it easy for firms to raise funds to trade, grow and create jobs goes to the heart of the productivity debate in the UK.  Anything that gets in the way can be detrimental to those firms and to the UK economy.

At Wyelands Bank, because we are new we have been able to do this from the outset.  We get to know our customer’s business and understand what they need.  We don’t simply offer off-the-shelf products. 

We help our customers meet their business challenges by understanding their range of assets and finding the right solution to suit them and we do it without the jargon.

Why Wyelands Bank

We understand that freeing up working capital is a major challenge for many businesses, and we offer a range of flexible services to help.

Our vision is to develop partnerships that provide opportunities to grow together, by providing access to finance, tailored to each client.


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