Invoice Finance Blog

Business Blog

Posted on 01 June, 2011

Invoice Finance Blasts Term Loans and Overdrafts

As bank lending to SME’s continues to fall (Bank of England Trends in Lending Report Q1 2011) and their policy of reducing business overdraft lending continues unabated, UK businesses are being forced to seek alternative methods of finance.
 
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.

With the cost of business finance through the high street banks continuing to increase and lending criteria becoming ever more stringent, SME’s are turning in ever growing numbers to an alternative funding option in the form of Invoice Finance.

What business owners like about Invoice Finance

• It’s fast and easy to set up.
• Directors’ guarantees are generally not required.
• It doesn’t affect other funding facilities.
• As the fund provider has security in the debtor book, they are much more flexible with lending criteria.
• Fund providers will consider poor trading history, poor credit history and business distress funding
• Funding is available within 24 hours of raising invoices.
• It works, boosting cash flow and managing credit control
• Customer credit checking facilities are a welcome feature.
• Bad debt protection is available.
• Professional credit control management is an optional feature.
• The funding grows as sales grow.

Invoice finance explained

Invoice finance is fast becoming the preferred choice of funding for many SME’s (small and medium sized businesses), and provides a flexible and effective method of funding working capital. Businesses use the facility as they need it and a real benefit of the service is that it grows as sales grow.

It’s the name for a range of services designed to improve cash flow by advancing funds against unpaid invoices and consists primarily of the two main products of 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 a facility where the sales ledger management is generally undertaken by the invoice finance company although in many cases this is an option.

Invoice discounting is classed as a confidential facility as the borrower’s customers are unaware of the facility which operates across the total sales ledger rather than at individual invoice level.

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

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