Invoice Finance
Known as 'Back-end Finance,' Invoice Finance enables clients to borrow money against their outstanding customer invoices.
Key Facts
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Can be used for UK and overseas invoices.
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A lender will advance up to 90% of the invoice value on day 1 and then will pay the remaining value (-fees) once the invoice has been paid.
How It Works
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The company raises an invoice.
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You send the invoice to the invoice finance provider, and the provider pays/advances anywhere from 50% to 90% of the invoice instantly.
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The company liaises with their customer for payment (or the invoice finance provider collects payment on the company's behalf).
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The company then receives the remaining balance when the invoice is paid.
Notices
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Only applicable for B2B sales where your client invoices other businesses for goods or services.
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Can be used in addition to a Trade Finance facility or simply stand-alone.
Why May You Need It?
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You have slow-paying customers - difficulty in getting paid on time.
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You find your accounts showing high trade debtors to cash at bank ratio (low cash balance, high trade debtors).
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Cash flow difficulties potentially arising from an order influx preceding trade shows or new trade agreements.
Popular Industries
Wholesalers
Cash flow fluctuations as a wholesaler had proved limiting, regularly hindering the ability to be nimble when opportunities arose. Since collaborating with a finance partner, we have managed to unlock capital from our outstanding invoices, enabling our next projects.