SME Invoice Finance

Invoice financing allows businesses to borrow against the value of their unpaid customer invoices. By selling invoices to a third party, you can unlock immediate access to funds without having to wait for customers to pay the invoice, helping with cash flow and supporting growth.

Invoice financing can be a good idea for small and large businesses that need to access large amounts of cash tied up in their unpaid invoices. Here are just some of the benefits of invoice finance:

• Improves cash flow
• More flexible than a business loan
• Reduced risk of late payments and bad debts
• Fast access to cash

Eligibility factors can vary from different providers, but you should qualify for invoice financing if :

• You raise invoices to business clients or customers for a product or service (not consumers)
• You have reliable customers with good credit records
• You are a Limited company, LLP or sole trader
• Your business is based in the UK or Ireland

It is worth noting that some providers may only accept businesses with a minimum turnover per annum and minimum monthly invoices sent per month.

To check if your business qualifies for invoice financing, simply apply now, and our team will be happy to help.

Unlike a traditional loan, invoice finance is an effective form of borrowing money without feeling like you're borrowing money. It's an advance of the money that's owed to you. You pay a small fee to the lender to receive all of that money.

Keeping a healthy cash flow when you're in business isn't easy at all times. So it's great to have an alternative route to funding that keeps your business running smoothly.

Most providers assign a dedicated account manager to deal with your business. You can also have real-time access to your account to see what funds are available to you and withdraw.

This will depend on the type of invoice financing facility you choose. For a continuous invoice finance facility like factoring or discounting, it's common to be on a six month or yearly contract. Some providers offer a trial period for a contracted service. However, selective invoice finance providers can work on a 'pay as you go' method with no contracts.

Many businesses find it hard to gain funding such as traditional lending from the bank. You are not judged on your historical financial performance but the ability to make sales and retain customers.

You're in control of how many invoices you submit, so you know how much could be eligible for the advance. This means you can predict your cash flow for the coming months.

Most invoice finance providers offer Bad Debt Protection. This safeguards you and your business against any potential losses caused by a customer not being able to pay. Make sure it's one of their priorities, as you'll need it if you find yourself with a problematic customer.

If you opt for a factoring facility, the invoice finance provider will manage your credit control, and your customers will be aware of your relationship with the provider. Lots of finance providers have specialised and trained teams to deal with your customers. Many find that the transaction becomes seamless, meaning you get happier customers who pay on time.

The cost will depend on the type of invoice finance agreement and the provider you choose. Typically, you will pay:

• Service Fee - This is the invoice facility's cost. It's calculated as a percentage of your gross turnover.
• Discount Fee - This is the cost of borrowing. It is calculated as a percentage of the invoice value.

Some providers have no setup fees and only take a finance fee once they have secured payment from your customer. Other providers charge a setup and service fee for outstanding invoices.

When researching providers, you'll want to know what costs are involved for the duration of your contract. Why not apply now to get your free, tailored, no-obligation quote today!

If you have raised an invoice to your customer in the early months of your startup, then you will be eligible for this type of funding. If you are at a pre-revenue stage, you won't be eligible until you start billing your customers. However, many providers offer other forms of business finance to start up businesses; you just need to find out if they are the right fit for you.

Providers need to make their checks before opening an account, but if you sail through the process, you could open your account within days and start receiving advances after sending over your first invoice.

The Financial Conduct Authority (FCA)

The FCA is an independent, non-governmental body that regulates the UK financial services industry. They regulate many products within the business finance industry, but currently they do not regulate invoice finance.

UK Finance (formerly ABFA)

UK Finance recently integrated Asset Based Finance Association (ABFA) into their new trade association, representing more than 300 UK credit providers, including invoice finance companies. All Invoice Finance and Asset Based Lending (IFABL) members adhere to standards and code of practice.