Business Financing

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Invoice Finance

Invoice Finance (also called receivables finance) is a type of business funding that allows you to release cash immediately, against unpaid sales invoices, so you don't have to wait for your customers to pay you. This is a selective service that allow you to dip in and out without any obligation to use it again.

Injection of Working Capital
Using this type of funding creates an injection of working capital into your business, which you can use for any purpose:

Finance expansion and growth - Fund large orders, or negotiate early settlement discounts from suppliers - Purchase stock, materials or equipment - Acquire or buy another business - Pay off creditors, HMRC arrears or staff wages

Improve Business Cash Flow
By using invoice finance you will improve your business cash flow, as you will no longer have to wait for customers to pay. It will help mitigate the effect of late payments from customers. The other benefit is that your customers are still given credit terms, so you remain competitive. You might choose to negotiate supplier discounts for early payment, with the money you now have available.

If you have a whole sales ledger of outstanding invoices to other businesses (B2B), you could raise a significant cash injection by cashing them all in. Alternatively, you can choose to get funding against just a few transactions, that you select, without any ongoing obligation to use the service again. This selective approach can be useful if you only have an occasional need for extra funding.

How Invoice Finance Works
Invoice Finance generates working capital and improves your cash flow by:

• Releasing money from the cash tied up in your outstanding sales transactions. This could range from 70% up to 100%, but is typically around 85% of the transaction value, depending upon your circumstances and industry sector.

• Allowing you to select transactions to get funded, or to get funding against your entire sale ledger.

It can also:

• Generate increased levels of funding as your turnover, and hence the sales ledger, grows. Bank loans and overdrafts are fixed, so do not work in this way.

• Provide optional help with credit control activity (or you can retain this in-house).

• Provide optional protection against customer bad debts.

Selective Invoice Finance

If you don't want to fund all your transactions, you can choose "selective invoice finance" and pick which transactions you receive an advance against. You might choose to select batches of transactions or just a single invoice or order. There are no minimums, so you never have to use it again, unless you choose to.

Confidential Invoice Discounting

CID provides your business with:

• Funding - against your unpaid sales invoices and new invoices as you raise them

• Confidentiality - you collect your own sales invoices, so your customers are unaware

• Bad Debt Protection - is optional to protect against customers failing.

How does Confidential Invoice Discounting Work?Confidential Invoice Discounting (also known as CID) is a type of invoice discounting that works as follows:

• The invoice discounting company provides you with a prepayment against invoices.

• An 85% prepayment against a £240K sales ledger could release £200K of funding.

• This immediate cash injection can be used for any purpose.

• You undertake your own credit control to collect your own sales invoices.

• Your retain all contact with your customers - they are unaware that you use CID.

• When customers pay, the balance of the invoice value (less charges) is passed to you.

• As you raise new sales invoices so new prepayments are made available.

• In this way the funding grows as your sales ledger grows.

The Benefits

• Improved cash flow - you get an initial prepayment against all your outstanding invoices and further prepayments against new invoicing.

• The funding grows with your business - as you raise more invoices the level of funding grows - unlike other forms of funding such as bank overdrafts, loans and crowdfunding.

• Customers don't know you are using the services, so your customer relationships are undisturbed.

What does CID cost?

There are two types of charge, the administration fee (to cover the cost of running the facility) and the discount charge which works in a similar way to interest on a loan.

We can provide independent advice and a quotation search service.

Invoice Discounting

Invoice Discounting (also called ID) is a form of receivables finance where you get funding against your invoices.

The definition of invoice discounting is a business finance facility whereby prepayments are provided against your outstanding sales invoices (that have been raised on credit terms). These are provided by an invoice discounter, whilst the supplier receiving the prepayments retains responsibility for the credit control.

Prepayments Without Administration

These prepayments can be up to 100% of the value of your sales invoices (minus charges), which can significantly improve the cash flow of your company. You will no longer have to wait for customers to pay, before being able to access and use that cash that is tied up in your unpaid sales ledger.

Some types of facilities allow you to upload your entire sales ledger, in the background in some cases, without the requirement for you to undertake any type of reconciliation. The amount of administration that you need to undertake, can therefore be minimal.

With ID, you continue to maintain control of your sales ledger and undertake all the customer credit control yourself, this allows you to closely control the contact with your customers in order to maintain relationships.

There are a number of different types of invoice discounting, however, the main variations are as follows:

• Confidential - there is no assignment clause on your invoices and no notice of assignment letter is sent out. You undertake all the credit control yourself, so your customers remain unaware that you are using the service.

• Disclosed - you retain the credit control activity in-house, but your customers are aware that a funder is involved. This gives the funder more comfort to finance customers that are not so financially strong.

• Selective - rather than getting prepayments against all your invoices, you pick and choose invoices to submit for funding.

• Export - funding against invoices to customers based abroad, which may be in addition to funding against invoices to UK debtors.

• Protected - any form of invoice discounting with the addition of bad debt protection.

Factoring Differences

With a factoring service, you also receive a credit control service from the factoring company. This is the key difference between factoring and invoice discounting.