Invoice Finance Blog

Business Blog

Posted on 02 June, 2011

Forget Business Loans and Overdrafts: Think Invoice Finance

Does the following sound familiar:

• Waiting weeks or even months for a decision from the bank on a loan application only to be refused.
• Having your overdraft facility reduced or called in and not renewed.
• Ever increasing borrowing costs even though interest rates remain low.
• Lack of appropriate business assets to meet the security requirements of the lender.
• Demands for personal guarantees on even basic borrowing.
• Real concerns over the availability of current and future business funding.
  
  

These are the circumstances many small and medium sized businesses have to contend with in today’s business finance market.

The latest figures from the Bank of England’s Lending Report for the first quarter of 2011 show that bank lending to SME’s (small and medium sized businesses) continues to fall. Financial data from the five major banks, Santander, Barclays, Royal Bank of Scotland and Lloyds Banking Group showed lending fell £2bn in the first quarter of 2011.

As banks continue their drive to reduce their exposure to business overdraft lending SME’s throughout the UK are forced to find alternative methods of business funding.

Step up Invoice Finance

There’s a fast, efficient and very effective alternative to the problems of dealing with the uncertainty of borrowing from the mainstream banks.

The Invoice Finance market is buoyant and Invoice Finance is the preferred choice of working capital finance used by ever growing numbers of small and medium sized businesses throughout the UK.

The key difference in the Invoice Finance market is that the lenders are keen to lend. Lending products continue to develop and facilities are often tailor fitted to meet a business’s individual circumstances.

As the lender takes its security from the debtor book of the borrower this enables them to be more flexible with their lending criteria and provide funding solutions to businesses that really work.

Invoice finance explained

Invoice Finance is the name for a range of services designed to improve cash flow by advancing funds against unpaid invoices and consists of two main products, invoice factoring and invoice discounting.

The service works on the basis that the invoice finance company will advance funds immediately against unpaid invoices, up to 95% in the case of invoice factoring and up to 90% in the case of invoice discounting. When the customer pays the invoice, the balance is then paid to the borrowing company less the invoice finance company’s fees.

Invoice factoring is the most popular facility where debtor management and credit control is generally undertaken by the invoice finance company although in many cases this is an option.

Invoice discounting is classed as a confidential facility which is not disclosed to third parties meaning that the borrower’s customers are unaware that the facility is in place.

Both methods offer options such as credit checks and bad debt protection.

The benefits of Invoice Finance

• It’s quick and easy to set up.
• Funding is immediate, generally within 24 hours of raising invoices.
• It boosts cash flow and enables easier cash flow management
• Suppliers can be paid quicker, improving relationships
• Professional credit control management is an optional feature.
• It doesn’t affect other funding facilities.
• Customer credit checking facilities are available
• Bad debt protection is available.
• The funding grows as sales grow.

Find out how invoice finance will benefit your business

The Invoice Finance Company is the UK’s fastest growing independent invoice finance broker and offer free consultations and financial assessments to SME’s across the UK.

About us

The invoice Finance Company is one of the UK’s fastest growing independent finance brokers. We do not charge for consultations, advice or financial assessments, so if you would like to find out more about invoice finance including invoice factoring and invoice discounting feel free to call us on 0845 459 7504 or email us at info@invoice-finance-uk.co.uk