Invoice finance is a form of financing that allows businesses release capital from unpaid invoices. It enables businesses to get their hands on cash owed to them much faster and in some cases instantly, supporting a positive cashflow, growth and development. Whether that means having the cash to buy new materials, invest in property or acquire a new branch, invoice finance can help companies to solve the problem of lengthy invoice terms and slow-paying customers.
If your business is trading and generating revenue, then invoice finance can be a great way to improve your cash flow and raise funding quickly, especially for service companies with long invoice payment terms of 30, 60 or 90 days. Invoice finance means that a third party will buy unpaid invoices owed to your company. They’ll pay you up to 85% of the value immediately and the remainder once the invoice has been paid to them, minus a fee.
To secure invoice finance, you’ll need evidence that you generate significant revenue and that customers are usually consistent in paying their invoices. Financiers will want to see detailed accounts before they buy your invoice as debt, so make sure that your finances are in order. It’s also important to note there are two different forms of this type of finance, being invoice discounting and factoring.
Choosing a Provider
The best invoice finance provider for your business will depend on several factors. Some providers reserve their products for larger businesses with a specified minimum annual turnover. Others offer tailored products to companies within specific industries, such as haulage companies, recruitment agencies and firms in construction.
While some companies may have universal products, don’t assume that the best provider for one company will be the best provider for your business. Below you can find a brief overview of some of the finance providers currently in the industry.
Invoice Finance Providers
Skipton Business Finance
Skipton is a particularly popular choice for smaller businesses, offering transparency when it comes to the breakdown of fees. They provide free credit reports on your clients as well as a dedicated accounts manager for your facility. You can receive up to 90% of your invoices as an advance.
MarketFinance
MarketFinance, formerly MarketInvoice, is the largest invoice finance provider in Europe, having funded over £2 billion of invoices in the last decade. They require only a short online application and their customer service is one of the best rated in the industry.
They offer some of the more flexible products on the market, advancing invoices anywhere from £5,000 up to £3 million within 24 hours. There’s no minimum usage fee, meaning you can use the service as and when you like. Their charges are typically between 1% and 3%.
Advantedge Commercial Finance
Advantedge, formerly Factor 21, is now one of the UK’s leading privately owned invoice factoring companies. They provide almost immediate access to funding and offer a comprehensive online client manager system enabling you to keep track of your factoring facility. They also offer bad debt protection against non-payment of invoices and are flexible about when you use them.
Giant Group
This provider specialises in recruitment finance, making it an optimal choice for any businesses in this industry. Giant Group provide up to 100% advance rates on temporary invoices and offer a range of products including discounting and factoring, both confidential and disclosed. They handle all facilities online so you can have round-the-clock access to your account.
Creative Capital
This Cheshire-based company provides products to creative businesses across the UK. Creative Capital mainly offer selective invoice finance or single invoice discounting, making them a flexible option for companies wishing to fund only part of their sales ledger. They also offer bad debt protection to cover your business against non-paying customers.
Secure Trust Bank Commercial Finance
Secure Trust Bank have multiple lending products on offer. They’re also one of the more flexible providers, offering lending services alongside other borrowing agreements you may already have in place. They have funded more than £500 million of customer invoices.
IGF Commercial Finance
IGF pride themselves in the personal service they offer. They have the best ratio of client managers to clients in the industry, boasting 1:45 against the industry standard of 1:100, and have a competitive client retention rate. They offer up to 90% of the value of invoices in advance, in both factoring and discounting arrangements.
