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What is Invoice Financing?

Invoice financing is about receiving pay more quickly. Instead of waiting a long time to receive invoices paid by customers, lenders fast-track most of the value straight away. In short, completed work gets paid more quickly.

You could be entitled to invoice finance if you regularly get invoices for work. Getting faster payments is a great way to ease cash-flow issues.

Worried about Invoice Financing?

If you are worried about how you are going cope with your Invoice Financing, we’re here to help you! There are many people who will find themselves in a panic after Invoice Financing. Here at Business Helpline, we can discuss all of your options and help you plan for a better future.
Call our team today on 0800 088 2142.

What is the invoice financing process?

Here is a step-by-step guide into invoice factoring and how it works:

1. Provide your goods or services to customers

2. You invoice your customers for goods and services

3. Those invoices can be sent to a factoring company and the factoring company will pay you the majority of the value – usually 80-90% – after conforming

4. Customers will pay the factoring company directly, chasing invoice payments if needed

5. The factoring company pays you what is left – minus the fee – once they have received full payment

How can you benefit from invoice financing?

You can benefit from a cash-flow surge in a number of ways. You could:

▪️Bridge short-term expenses

▪️ Make repayments on a loan

▪️ Take advantage of a business opportunity

▪️ Make a purchase that you wouldn’t have ordinarily been able to make

What else should I think about with invoice financing?

There are a number of key points to consider when it comes to invoice factoring.

▪️  Customers will want to know that you are using a factoring provider

▪️  Factoring providers are able to credit check potential customers for you

▪️  Easier for smaller or early-stage companies to get on board with this

What is the difference between secured and unsecured lending?

There are two types of borrowing routes to go down: secured and unsecured loans.

A secured loan is more common, where a business borrows money against an asset of their company. The lender now has something to hold the borrower over, and they are therefore more likely to offer them something to borrow.

Unsecured loans do not involve collateral but the lender might have a general claim against the borrower, just in case they do not make repayments on time. If a company goes bankrupt, secured creditors will typically receive a bigger amount of their claims. That means secured loans usually have lower interest rates, making them more appealing for businesses who are seeking to go down the route of asset financing.

What are the advantages to invoice financing?

▪️  Gives quick cash to your business

▪️  Has a quick turnaround time for loans

▪️  Your assets are not a risk

▪️  Provides a boost in credit sales

What are the disadvantages to invoice financing?

▪️  Your customers have to be other businesses

▪️  Longer-term costs

▪️  Chasing payments will be out of your hands

Get in touch

If you are unsure whether refinancing this pathway will be right for you, don’t hesitate in contacting us.

Call one of our compassionate experts at 0800 088 2142.

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Invoice Financing FAQs

Do I need a good credit rating to get access to invoice financing?

A good credit history is not essential if you want access to invoice financing. This is different to the normal requirements that come with many other forms of external funding, like bank loans and business overdrafts.

Businesses that have been turned down by banks will often be able to find a solution through invoice financing.

How much money could I release through invoice financing?

That depends on how much money you have tied up in unpaid invoices.

Will invoice financing impact any strong customer relationships that I have?

It shouldn’t. However, you should inform your customers about your plans to us invoice financing. Communication is key.

What are the different forms of invoice finance?

There are three forms of invoice financing:

1. Invoice Financing


3. Invoice Discounting

Invoice Financing: You provide cash in exchange for invoices and gives your business a credit control function. All of your business will be dealt with by the external company.

CHOCS: This is similar to invoice factoring but you communicate with customers yourself.

Invoice Discounting: You are funded for the total outstanding debt by the sales ledger. Your normal credit control team will act as normal, and you will have more control over the actions of your business.

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