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Supporting your business with Invoice Finance

Published on 12th September 2018 - Last update on 1st July 2020

A reliable cashflow has always been a good indicator of a sustainable business venture. But if you were to experience a cashflow shortfall for any reason, the problems that may result could easily jeopardize your business’ ability to grow, trade and maintain day-to-day operations. As such, in order to limit the damage, taking immediate action is of the utmost importance. One way in which many UK businesses overcome this issue is by applying for Invoice Finance. So if you have unpaid business-to-business (B2B) invoices, applying for Invoice Finance could offer you the support your business needs to endure.

Why should I apply for Invoice Finance?

If you’ve provided a product or service to a customer, being made to wait around for full payment can be frustrating. It means you being left out of pocket until the debt have been cleared. However, if they’re persistently late in meeting the deadlines laid down in the invoice, the issue becomes more than just an irritation. Being without those funds could affect your ability to run day-to-day operations, replenish supplies, pay staff or even keep up with your own financial commitments. But rather than let the situation get worse, you could acquire these funds by applying for Invoice Finance - regardless of whether the customer is late or you need the funds sooner.

Need access to additional funds? Got capital tied up in unpaid business-to-business (B2B) invoices? Apply for Invoice Finance and learn more about how your business could benefit.

Who can apply for Invoice Finance?

Regardless of your sector, your business must have the capacity to conduct a portion or majority of its trade using Business-to-Business (B2B) Invoices worth in excess of £5,000 in order to qualify for Invoice Finance. You’ll also need to maintain up-to-date business ledgers and have the ability to run effective credit control procedures. However, you must also consider your annual revenue, which determines the type of agreement you could be eligible for. Whilst Invoice Factoring requires you to have an annual revenue in excess of £100,000, Discounting demands no less than £25,000. As such, this enables Invoice Finance to support a wide range of businesses, sectors and financial situations.

How does Invoice Finance work?

What makes Invoice Finance such an invaluable tool for so many UK businesses is that it enables you to release up to 90% of the capital tied up in any Business-to-Business (B2B) invoices worth more than £5,000. Plus, because it’s usually subject to little or no usage restrictions, Invoice Finance can be used for any number of purposes, including uneven cash flow. However, in order to make an informed decision, fully understanding the key differences between Factoring and Discounting is essential.

  • Factoring: requires your business to have a minimum turnover of no less than £100,000. However, using this option does allow you to let the lender pursue the debtor on your behalf, whilst being confidential about the fact that you’re using their services. In addition, some lenders may provide bad debt protection as standard, safeguarding your business in the event that the debtor doesn’t pay or falls into liquidation. Once the debt has been repaid, the lender will release a balance (e.g. the remaining 10%) minus costs and fees.
  • Discounting: on the other hand, this requires your business to have an annual turnover in excess of £25,000 and be able to collect the debt using your own credit control procedures. But instead of the debtor paying your business, they’ll pay directly into a lender-controlled facility. Once the debt has been repaid, the lender will then release a balance (e.g. the remaining 10%) to you, minus costs and fees.

Thinking about applying for Invoice Finance?

Cashflow is, without a doubt, the lifeblood of any business. So when there’s a disruption in this area, the effects that it may cause can be devastating, especially if the situation is left unchallenged. By releasing the capital that you have tied up in any Business-to-Business (B2B) invoice, you can provide your business with the support it needs to go forward. So, in order to safeguard your business’ success, applying for Invoice Finance could be the answer. All you need to do is source an agreement from a lender you can trust, which is where speaking with a qualified business finance professional can help.

At Rangewell, we’re an Access to Finance specialist who’s mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. So if you’re looking for additional funds and have capital sealed away in unpaid business-to-business (B2B) invoices, apply for Invoice Finance today or find out more with Rangewell.

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David Harrison

David Harrison

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