Invoice finance offers an effective way for companies to boost their cash flow from money tied up in outstanding invoices. Rather than wait 30,60 or 90 days for your invoices to get paid, you can validate your invoice with a specialist lender and receive 85% of the amount upfront to use for working capital.
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Invoice finance offers an effective way for companies to boost their cash flow from money tied up in outstanding invoices. Rather than wait 30,60 or 90 days for your invoices to get paid, you can validate your invoice with a specialist lender and receive 85% of the amount upfront to use for working capital.
This calculator will give you an idea of costs. The exact amount and Initial Rate payable will be provided from the lender subject to credit and affordability checks.
Your monthly payment will be:
£169.35
Interest on this loan will be:
£18,805
Annual Percentage Rate (APR):
%
Total repaid will be:
£50,805
Choice business loans can arrange a wide range of business finance solutions for business of all sizes. Services include business loans. Crowdfunded business Loans, Short term unsecured business loans, Merchant cash advance, Pension led business finance, Overdraft alternatives, Asset finance, Asset backed loans, Invoice finance, Commercial mortgages.
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What is Invoice Finance?
Invoice finance allows you to borrow money upfront from any invoices that you have outstanding and might have long payment terms. For some industries where you receive orders upfront and cash flow is king, you may need the money immediately to pay for things like staff, materials and supplies – and your business cannot wait 60,90 or 120 days for the invoice to clear.
This is where invoice financing comes in. Through a number of lenders, you can borrow up to 85% of the outstanding invoice amount and receive this money upfront and use it for your working capital. You pay only small amounts of interest each month, for as long as you need, and once your invoices have been cleared by your client, you can simply repay the loan in full.
Lending Expert works with a number of specialist invoice finance companies and you can borrow anywhere from £5,000 to £50 million for your business. Simply use our comparison table provided and check your eligibility today!
Invoice Finance Example:
John runs a construction company and has been given a £200,000 job to rebuild his client’s home. He receives 50% of the payment upfront and 50% upon completion of the project.
But John needs to more than just £100,000 to complete the work required, since he needs to pay for more materials, builders, insurance, machinery and more.
He shows his invoice and contract to an invoice finance company who verify this and confirm it with the client. John borrows 50% of his outstanding invoice upfront (equal to £50,000) and uses this as working capital.
The job lasts 6 months which John completes on time. His outstanding invoice is paid and he completes all interest payments with the lender. Simple.
What Are The Terms?
Borrow £5,000 to £50 million
Borrow for 1 to 12 months
Rates from 2% to 3% interest per month
Receive up to 85% of invoice value
Secured against outstanding invoices (no physical collateral)
All credit histories considered
Funds available in 48 hours
What Are The Types of Invoice Finance?
Invoice finance has many different names and you may often hear it referred to as the following, each with a slightly different meaning.
Invoice factoring – Rather than just validating one invoice, here are you are handing over an entire ledger of multiple invoices and you continue to work with the lender on a regular ongoing basis. This is popular for companies that fulfil orders for food, fashion items or consumer products.
Invoice discounting – This is another way of saying invoice finance, whereby you are receiving a percentage of your outstanding invoice upfront.
Invoice trading – This is where you submit invoices on a pay-as-you-go basis and only when you need to.
Who Uses Invoice Finance Companies?
Invoice finance is used for a wide range of companies and mostly those that are looking to improve their cash flow position. Particularly those companies that receive large orders upfront and need money to fulfil them, this is a good reason for using this type of finance. Similarly, those receiving orders from large companies usually have to suffer for invoices to be cleared by as long as 90 or 120 days and receiving funds upfront can be hugely beneficial, including:
Fashion companies
Caterers
Sellers of consumer goods e.g electronics
Construction companies
Startups
Recruiters
Manufacturers
Marketing agencies
Online retailers
What Are The Benefits of Invoice Finance?
There are a number of advantages of using invoice finance for your business. With delayed invoices holding you back, the opportunity to receive as much as 85% upfront and within 48 hours is a huge positive.
The rates are very competitive, with some lenders charging just 2-3% interest per month, making it very affordable.
Above all, it can help keep your cash flow in check and allow you to thrive and grow your business.
Am I Eligible for Invoice Finance?
Your business is registered in the UK, Scotland or Wales
You are a limited company, sole trader or similar
Show proof of invoices or contracts
No recent IVAs or bankruptcy
Minimum annual turnover of £50,000 (depending on the lender)
Minimum trading history required (depending on the lender
What Information Do I Need to Provide The Lender?
You will simply need to provide the invoice finance lender with proof of your outstanding invoices or contracts highlighting the purchase order or outstanding amount. This will need to be validated by the lender, who will usually contact your client or bill payer to confirm the authenticity of the invoice and the arrangement you have agreed with them.
In addition, you may need to provide proof of your identity, ownership of your limited company and recent trading history. However, every lender is different and their requirements may vary.
How To Apply for Invoice Finance with Lending Expert
To check your eligibility for invoice finance, simply use our comparison table to compare the rates and terms from our partner lenders. Once you have found the right one for you, simply click on ‘Get a Quote’ and you will be taken to their website where you can enter your details.
You should hear back immediately and be asked to send some further information including proof of your business and outstanding invoices.
With approval in a few days, your loan can be provided to you upfront within 48 hours or just a few days for larger amounts.
FAQ
Invoice finance costs around 2-3% per month, and this could be higher or lower depending on the lender and the quality of the customer's background and application. Overall, this works out similar to an overdraft, although you may not have access to this from your bank.
Yes, invoice finance is not subject to having good credit and the security lies in the quality of your invoice and the company that is paying it. In fact, if you are going to invoice a large UK retailer, this gives the invoice funder a lot of confidence that the loan will run smoothly.
If you cannot repay your invoice finance loan, it is your responsibility to find other means of repaying it and you will be liable for the fees. Some providers offer a ‘without-recourse’ service at an extra cost, this protects businesses against non-payment.
There are a number of reasons why your invoice may not get paid in full, including whether you are unable to deliver the goods, there is a glitch that stops you from completing the sale or the purchaser is unable to pay you.
This type of product is not secured against your property, office or any assets. However, in certain cases, if you have borrowed a large sum upfront and this does not get repaid, the lender could cease any assets to recover the cost of their loan.
No, the industry is not regulated by the Financial Conduct Authority, however, there are a number of regulated lenders that offer this service. Either way, it is considered a safe and responsible product to use.
