Invoice finance is a form of short-term borrowing that allows you to borrow money against sales invoices before they’ve been paid.
The way this works is quite simple. You sell your outstanding invoices to a lender, and they pay you up to 90% of the full invoice value, upfront. Once the lender has received full payment for the invoice, they will then return the remaining 10% to your business, minus a small fee.
Yes, a lender will take security over your debtor book. Lenders will consider each business individually. Business Finance Expert will make you aware if there are other products or services that may be more suitable for your business.
It can depend on the facility and your business requirement; however, it ranges from a few days to a few weeks. We aim to work closely with you to understand your business plans and requirements to get you up and running as soon as possible.
The cost will be dependent on your requirements from the facility and the size of your business. Once we have understood your business needs, we will put a clear proposal together that will outline the facility we can arrange with lenders on your behalf, along with the associated fees. The main charges within Invoice finance are a service fee which is a percentage of the invoice value and a discount fee which is calculated on the balance the lender advances to you.
While Invoice Discounting and Invoice Factoring both allow you to unlock the cash tied up in unpaid invoices, there is a key difference between the two.
With discounting, you remain responsible for collecting the outstanding invoice debt, which means you need to manage collection of your outstanding invoices from your customers directly. As a result, discounting can be provided confidentially, so that your customers are unaware that you’re using invoice finance.
With factoring, you’ll benefit from a full credit control service. This has the added benefit of allowing you to concentrate on growing your business without the added worry of chasing customers for payment.
Given that the lender would be collecting the payments directly from your customers, factoring facilities are predominantly provided on a disclosed basis.