Get in touch for a free, no-obligation chat with an adviser about how we can help
Home » Invoice Financing
Invoice finance is when a lender take security over your unpaid invoices and lends you the money until your unpaid invoice is satisfied. The funds can typically be released within 24 hours of the invoice being raised and you can borrow up to 90% of your unpaid invoices. The amount you can borrow will be subject to individual criteria as certain industries are seen to be slightly higher risk than others. There are two types of invoice financing which are Factoring and Invoice Discounting. The main difference is that a Factoring facility will normally take over your sales ledger and collect payments directly from your customers. Invoice discounting is similar except you keep control of the sales ledger and chase your own payments.
The type of businesses that will typically use invoice financing will be businesses that sell a service or product and then incur a long wait to be paid. Payment terms can range from 14 – 90 days, which can cause a huge cashflow whole, especially when going through a growth period.
The industries that typically use invoice finance are.
According to a number of studies available around 80% of businesses fail due to poor cash flow. In the UK, there is currently 58% of SME businesses that are awaiting on late payments. It is clear cash flow is a huge issue in the market and invoice financing works as a great plug for cash flow gaps. It can create immediate cash injections when money is required. It can also be a great tool for helping businesses scale.
As business go through a growth phase, the investment in people, marketing and other costs can be huge upfront costs. If you then include the fact that these businesses are then waiting 90 days to be paid by their customers it can cause a recipe for disaster. Invoice financing is a great flexible tool that will also grow at the same pace as your business is required. This can be a huge benefit when going through a huge growth curve.
As with most financial products in the lending market, invoice finance facilities are extremely complex. Banks take advantage of this and will always pitch as high as they can in terms of fees and pricing structures. Having a good adviser on your side through this negotiation can be hugely beneficial and will make sure you are getting the correctly structured facility for your business.
MESA Financial Consultants Ltd is a private limited company registered at: Mesa Financial Consultants 77a Richmond Road, Twickenham, Middlesex, TW1 3AW Company No. 09544805.
The information and content within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.
Mesa Financial is a whole of market broker.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Some products are not regulated by the Financial Conduct Authority.
Please note that Mesa Financial Consultants is not responsible for the accuracy of the information contained within any linked sites accessible from our website.