Rubic with export sales of $480m pa has an average collection period of 3 months, bad debts are 2% on sales.
A factoring company will provide non-recourse factoring for a fee of 5% of revenue. As a result of this, administration savings will be made of £8m p.a. and the credit period will fall to 2 months.
Rubic has a cost of capital of 10%, and the exchange rate is currently 2 $/£.