Things are starting to move for Powerplus, the Eastbourne company helped by a panel of business experts.

The company manufactures devices that can be fitted to car engines to save fuel and cut emissions.

The experts felt Powerplus had potential for growth but needed help to get the project moving.

In the first of a series of meetings offering its directors advice and guidance, the focus was on how factoring could help the business cope with some of its growing pains.

Powerplus directors Andrew Niekirk and Peter Treadaway met David Thomson, managing director of Metropolitan Factors of Haywards Heath.

They explained the cash flow issues they expected a face in the near future as the business grows.

Mr Treadaway said: "Until now, sales of Powerplus units have been mostly either to individuals ordering one or two for their own use or to UK-based fleet managers. Customers have tended to order and pay for the units by telephone, giving credit or debit card details at the time of placing the order.

"Receipt of payment has been relatively swift and straightforward."

Mr Niekirk said fleet purchasers had tended to pay relatively quickly.

But given the global appeal of the product and an agreement to market it in South-East Asia where pollution was causing serious health problems, there was likely to be a gap between invoice and receipt of funds which could result in a cash flow problem.

Powerplus was already talking to a number of major international vehicle manufacturers based overseas.

Mr Niekirk said: "Major buyers seem to expect seriously long-credit terms. It's the way of the world. We need to make sure we are geared up to deal with this issue now because it's only a matter of time before it becomes top of the agenda."

Mr Thomson said factoring and invoice discounting offered a number of benefits to growing businesses like Powerplus.

He said: "This service could provide instant access to cash from invoices and allow working capital to keep pace with the company's growth."

Traditionally, businesses had obtained working capital through a bank overdraft but the downside of this arrangement was the overdraft was usually capped and based on the value of whatever security a company could provide.

Factoring and invoice discounting were the modern alternatives to overdrafts.

Mr Thomson said: "The number of companies using these services has grown at about 15 per cent a year over the last 15 years or so.

"One of the main benefits is, unlike a bank overdraft, finance grows in line with sales and is not generally linked to the value of additional security."

Firms using a factoring facility send out invoices as normal and forward a copy to its factor, which immediately makes available an agreed percentage of the invoice value.

The factor sends monthly statements and follows an agreed credit control strategy.

It also receives payments from customers and credits the the balance, less its charges. It updates the sales ledger and provides regular statements and management reports.

Mr Thomson said: "We advance up to 85 per cent of the value of invoices. This is significantly more than through a traditional bank overdraft.

"With funding directly linked to a company's sales performance, factoring will remove the barriers imposed by traditional bank lending, giving businesses the ability to take advantage of new business opportunities."

Mr Thomson said some important checks should to be made before choosing a factoring company.

He said: "Check it is a member of the Factors' and Discounters' Association, the trade body for the industry. Its 40 members follow an established code of conduct and it monitors members'

financial stability. You should ask for a copy of the company's accounts and the names of its backers.

"You don't want to be in a situation where your factoring company has a cash flow problem.

"If the factor is an offshoot of your bank, check whether your existing overdraft arrangements will be affected.

"Factors owned by High Street banks are financially safe but an existing overdraft may have to be cut back so the bank's overall exposure to your company is reduced. This can throw calculations into disarray and needs to be addressed as soon as possible."

The average factoring charge was between 0.5 and three per cent of turnover.