Invoice Finance Services

If you sell your goods or services to other businesses on credit, it can often take anything from 30-120 days to receive payments for a job which you have already completed. This can have severe consequences on your cashflow, making it difficult to afford your day-to-day expenses such as materials, rent and wages and making it almost impossible to pay for the investments which will allow your business to grow to its full potential. Invoice finance is a cashflow solution which allows you to create a healthy balance sheet, advancing income you would have received in however many days time from your clients to make use of today.

How does invoice finance work?

With traditional bank lending requiring you to provide historical data and assets to secure, it is usually a challenge getting the overdraft or bank loan at the size and rates you can work with. Invoice finance on the other hand, is a continuous set of cash advances based on the value of any invoices you have yet to be paid for. Here is how it works:

  1. You provide a service or product to your client and agree on payments terms – an invoice is produced (it is worth knowing that invoice finance also covers uncertified applications for payments for those in the construction sector).
  2. Once you generate the invoice, you are ready to notify your invoice finance lender. This lender (provided by us) will advance you up to 95% of the value of the invoice as a cash advance, usually within 24 hours of receiving the notification.
  3. Once the cash is collected from your client at the end of the creditor days, you will receive the remaining value of the invoice you were not initially provided by the lender. It is at this stage when the lender takes their fees.


What are the costs involved in invoice finance?

Invoice finance usually incurs only two costs:

Discount rate: Don’t be confused with the word ‘discount’; this is really more of an interest charge on any money you have borrowed. For instance, x.xx% daily charge for the 30 creditor days you borrow for one invoice and maybe the same daily charge on cash you borrow for another 60 day credit invoice.

Service charge: This is a monthly charge for having the invoice finance facility. The figure is based on your turnover and covers all admin costs involved with the invoice finance lender. The service charge also depends on whether you choose a factoring facility or an invoice discounting facility.

Which is right for you, factoring or invoice discounting?

Invoice finance is a flexible cashflow solution which means you can tailor it to your needs. As a result, two of the most popular types of invoice finance are called factoring and invoice discounting. These two alternative finance solutions work the same as described above but with one major difference – do you want to outsource your credit collection facility or is it something you want to complete yourself?

If you are a business with a turnover of over £25,000 plus VAT, you may be interested in factoring. This is an invoice finance facility which works the same as described previously but at the time of credit collection it is the factoring lender who approaches the client and collects the debt. This saves your precious time when assessing how much admin would have been required to chase accounts receivables.

If you already have an established credit control facility and your turnover is £100,000 plus VAT, you will likely be advised to look into invoice discounting. This can be a disclosed or undisclosed facility which means you can choose to tell your clients you are using invoice discounting or not, giving you maximum control. Once you collect the debt from your client at the end of the creditor days you will return the money to the lender through dedicated accounts.

Securing finance through your future income

If you feel that invoice finance, be it factoring or invoice discounting, may be a good fit for your business strategy then we can help. Our service includes:

– Transparent expert advice which is obligation and cost free throughout and beyond the entire process.

– Recommendations for which finance is best for your business, including invoice finance

– An award winning service as part of the UKs Business Moneyfacts Asset Finance Broker of the Year.

– We are partnered with a wide panel of financial lenders which will enable us to compare mainstream bank lending with bespoke private lenders and even Government schemes.

To get started, fill in the quote form using the link below and one of our expert consultants will give you a quick call for a chat as soon as we can.

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.

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