Invoice Financing, Factoring & Discounting

Lenders typically advance 85-99% of the invoice value, with the remainder paid once the customer settles the invoice. If you are in the construction industry, or have a high debtor concentration, then your advance rate may be less (50-60%).

Invoice finance is typically secured against the invoices themselves, meaning no personal or business assets are required. However, a debenture is usually placed on the business, which means that the lender has a charge over the business’s assets, giving them priority if the company becomes insolvent. Some lenders may also require a personal guarantee. Security requirements vary, so it’s worth comparing lenders to find the right fit for your business.

Yes, it’s very easy and it happens all the time. There could be a number of reasons why you might consider switching to another provider. Perhaps you’re unhappy with the level of service or you’re searching for a more cost-effective deal. The good news is that despite what people may assume, switching providers is not a lengthy process.

In some cases yes, but it all depends on your business and your projected turnover as this will be taken into consideration when going through this process. Not all providers deal with start-ups, but there are providers out there that do.

No, not always. The finance is secured against your debtor ledger and assuming this is adequate, a Personal Guarantee may not be required.

No, not at all. This is a common misconception. Over 40,000 UK SMEs use Invoice Financing and it merely shows that you are prudently managing your cash flow. If anything, that should give all your customers and suppliers more confidence in your business.

Yes, one of our Invoice Financing specialists can arrange this for you, as either part of your facility or separately. It’s important that you have the protection in place, just in case your customer cannot settle their invoices. Some lenders may also require this protection.

Yes, but it can be more challenging. Many lenders are hesitant to offer invoice finance for construction businesses due to stage payments, contractual disputes, and retention clauses that can delay or reduce invoice payments. However, some specialist lenders do provide Construction Invoice Finance, which works similarly but is tailored to the industry. They may fund applications for payment or certified invoices rather than standard invoices. If you’re in construction and need invoice finance, you’ll likely need a lender with industry expertise and flexible terms.

Yes - for debtors overseas, international factoring (or export finance as it is sometimes referred to) is the best solution. It works in the same way, except that the UK factor works directly with agents in the country that the invoice is issued to. We have plenty of providers that will arrange Invoice Financing for overseas debtors, so get in touch with us to find out more.

The cost of invoice finance depends on the type of facility you choose—Factoring, Invoice Discounting, or single invoice financing. Fees typically include: 1. A service fee – A percentage of your invoice turnover. 2. An interest charge – Applied to the funds advanced. Factoring tends to be more expensive as the lender handles credit control on your behalf. Costs vary by lender, so always check the full fee structure. Watch out for disbursement costs, as these hidden charges can make an initially low-cost facility more expensive than expected.

Once approved, funds can be available within 24-48 hours of submitting an invoice.

Whether your customers know you’re using invoice finance depends on the type of facility you choose: - Disclosed Invoice Finance – Your customers will be aware, as the lender collects payments directly. - Confidential Invoice Finance – Your customers won’t know, as you handle collections, and payments go through your account. Some lenders may still verify invoices with your customers, so if confidentiality is important, check the provider’s process before committing.

This depends on the agreement. With recourse Invoice Finance, you’re responsible for unpaid invoices. With non-recourse, the lender takes on the risk (usually for a higher fee).

In most cases, a designated trust account will need to be set up for payments to be made to. This means your invoice payment details will likely need to be updated to reflect the new account. Your lender will provide specific guidance based on your facility agreement. If this is a deal breaker, then there are a small selection of lenders who do not have this requirement. Contact us to discuss your individual requirements.