Invoice Finance

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What’s the value of your outstanding invoices?

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Benefits of an Invoice Finance Quote from BusinessComparison

Release up to 90% of invoice value

Finance from £5,000 to £1,000,000

Quick access to funds and transparent fees

What Does Invoice Finance mean?

Invoice financing is a term which is used to describe a variety of asset-based lending options. A business can sell their invoices to a third party finance company, as a way to improve cash flow. The invoice finance company will charge a fee for their service, however the borrower is able to unlock the cash tied up in overdue invoices.

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What are the eligibility requirements for invoice finance?

There are some basic requirements which your business must meet, to be eligible for invoice financing:

Requirements:

1. Your customers must be other businesses.


2. Your business must be a registered limited company or LLP, although some lenders are willing to accept other business types.


3. You must offer a standard credit term for your industry.


4. Your minimum turnover must be at least £50,000.

5. You may need to issue a minimum number of invoices each month, although the amount can vary by lender.
   
   When you apply to the factoring or discounting provider, they will determine the level of risk associated with your business. The risk level will be influenced by your customers history of payments, your relationship with your customers and the industry you operate in.

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Invoice finance - Frequently Asked Questions

How Does Invoice Financing Work?

When businesses sell services of physical goods to customers, often these are sold on credit. This allows customers to get the items or service they need, as long as they pay within an agreed credit term. However, this can mean your business needs to wait a long time for payment, if the customer does not pay within the agreed time frame. Although you may get paid on time, your business will still need to pay for the cost of providing the goods or services before receiving payment, which can leave a temporary shortfall in cash flow.

If you decide to use a form of invoice finance to obtain credit, you will continue to trade and issue invoices to your customers in the usual way. You will then need to provide the invoice financing company with a copy of the invoice. The lender will issue your business with an agreed percentage of the invoice, so your cash flow instantly improves, without waiting for your customers to pay.

Depending on whether you choose invoice discounting or invoice factoring, you may need to continue to chase the unpaid invoice in the usual way. Once your customers pay the invoice, your business will receive any remaining amount minus the agreed fee and borrowed amount.

What is Invoice Purchasing?

Invoice purchasing is a form of invoice finance, where the company essentially buys the invoice. The invoicing company takes over the risks and responsibility of chasing the invoice payment. Please click here to see BusinessComparison's invoice purchasing options.

What is Invoice Discounting?

Invoice discounting is another form of invoice finance, which allows businesses to release cash tied up in the sales ledger. Your business remains in control of its credit control procedures, so you will continue to collect payments from late paying customers. Please click here to see BusinessComparison's invoice purchasing options.

What is Invoice Factoring?

A factory company offers a form of invoice finance, where they take responsibility for your credit control processes. They provide you with an agreed percentage of unpaid invoices, then collect payments in full from your customers. Your business will then receive any remaining balance, minus any charges when your customers pay their invoice.

Invoice factoring is not confidential, so your customers will be aware that you are working with an invoice factors company. As a business if you would prefer to maintain confidentially and keep your debtor collection within the business, invoice discounting may be the one to consider.

What is a Factoring Company?

In a similar way to invoice discounting, invoice factoring provides access to capital which is tied up within invoices. The main difference with factoring company's is that they take control of your credit control and accounts receivable processes.

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