Invoice finance can be a valuable solution to the cash flow issues faced by businesses in many different business sectors.
It solves one of the main problems faced by so many businesses, which is that, once you issue an invoice, you can’t predict exactly when your customer will settle it, and hence when the funds will arrive in your business.
Instead, if you have invoice finance in place, you know that your finance provider will send you a payment as soon as each invoice is issued. This payment will cover a significant proportion of the invoice amount – perhaps between 75% and 95%. Then, when the customer finally pays the invoice, you receive the remaining portion of the invoice’s value, less an amount that the provider retains as a fee.
Invoice financing might be suitable for any business that issues a significant number of invoices to other businesses. You can’t use it for invoices issued to retail customers.
Some of the business sectors that might use invoice finance include:
- Construction
- Logistics
- Manufacturing
- Engineering
- Professional services
- Recruitment
- Printing
- Publishing
- Social care
- Technology
- Commercial food service
- Wholesale distribution
- Office equipment supply
- Office services, e.g., cleaning
- Plant hire
- Agriculture
- Warehousing and storage
- Outsourcing
- And many more ….
Some of the companies offering invoice finance in the UK include:
- Bibby – its website contains testimonials from invoice finance customers in sectors such as plastics, wholesale, food manufacturing, recruitment, construction, and transport
- Hitachi Capital (Novuna Business Cash Flow) – its case studies illustrate how it has assisted businesses in industries as diverse as recruitment, consultancy, information technology, and archaeology. It also claims to be a leading provider of invoice finance to newly established businesses
- Close Brothers – this company suggests manufacturing, healthcare, recruitment, and engineering businesses could all benefit from its invoice finance funding
- Aldermore – which has supplied invoice finance to companies involved in food and drink manufacture, property development, transport, and other manufacturing
- Easy Invoice Finance – another provider that has assisted many small businesses, this company has invoice finance customers from the security, manufacturing, transport, and recruitment sectors
- Easypay Services – which specialises in providing finance to the recruitment sector, especially start-up and smaller recruiters
- Major high street banks – which typically consider applications from all business sectors, although some banks might say you need to have an annual turnover of £500,000 or so before they will consider you for invoice finance
- And many more ….
This is not intended to act as an endorsement of any of the lenders listed. The industries mentioned for each specific lender are also just examples, and it’s likely that they will also be able to provide invoice finance to many other business sectors. If you get in touch with us here at Funding Bay, we can find lenders and products that best suit your individual business circumstances.
Advantages of taking out invoice finance might include:
- It can make paying your own bills, e.g., to your suppliers, much easier if you know cash will be available
- In general, it can alleviate your cash flow worries considerably
- Invoice finance can usually be obtained quickly – it should take no more than two weeks to set up the agreement, then payment for each invoice should be received from the lender within 24 hours
- Most businesses should be able to access this form of finance – there will be lenders who will consider start-ups and businesses with a low turnover
- The lender will use the unpaid invoices as its security, so you shouldn’t have to designate any business assets as additional security
Get in touch with us at Funding Bay for your invoice financing needs.
Check out our invoice finance calculator here.
