Business financing simplified
Selective Invoice Finance
in a nutshell
Selective invoice finance is a flexible cash flow product designed to be a faster, flexible take on factoring and invoice discounting. As the name suggests, this product allows the borrower to select which invoices it wants to finance against. This allows businesses to lend against single invoices, single projects, or single debtors rather than against their full sales ledger.
Selective invoice finance tends to be delivered by lenders that have the ability to move quickly and flexibly, and as such, compared with sister products invoice discounting and factoring, selective invoice finance is very fast to set up (within the week). Further, the credit assessment is almost exclusively on the customer, which means even early-stage businesses can use selective invoice finance.
So a business can draw down flexibly from the invoices that they want to use and it can be set up quickly… So what is the drawback? Selective invoice finance tends to be pretty pricey and the lender tends to get very involved in validating your debts with your customer. The facilities are not designed to be used for more than 20/30% of your sales ledger as the process to fund is quite encumbering on the borrower (and the end customer).
Selective invoice finance tends to come with personal guarantees attached, and on occasion, debentures on all assets or the sales ledger.