How many types of invoice financing?
With us, you can explore different options for financing against invoices. Do not worry if figuring out the right choice is difficult for you! We help you in our best efforts. Remember that the final selection must coincide with your business's circumstances.
The list of types is as follows:
Selective invoice financing in the UK is another term that defines this particular category. Feasibility is the biggest factor that can attract business owners like you. This facility elaborates:
- Maximum borrowing opportunity
- No specific least turnover requirement
- It lets you sell one or more invoices
It is popularly known as invoice finance factoring. Get relief from putting effort into following up with clients for payments. Unlock benefits like:
It gives your business the liberty to sell its sales ledger. However, you feel free while thinking on transferring credit control. It will remain with you. The additional advantages are:
- Complete privacy
- 100% secure process
- No requirement for an asset
It is exclusive financing available for the construction industry. You must seek this financing assistance if you have a construction business. Enjoy customised offerings from experienced lenders. Avail other extra facilities like:
- Assurance for business growth
- Obtain money on applications
- Fetch support of quantity assessor
What are the benefits and drawbacks of invoice finance?
You are at the right place if you do not want anything to hamper the business cash flow at any cost. We are talking about invoice dues. Our lookout here is to make sure your business expansion plans should not come to a halt. Thus, our forte is to take you closer to the ideal finance deal offered by a trusted finance provider.
The various perks of this online accessible invoice finance are:
Boosting cash flow
You can procure money at the earliest. The process is relatively faster than banks. We choose to work with lenders who are swift in taking action. Therefore, you can experience a faster process that can result in an instant boost in cash flow.
Maintaining working capital
Delayed payments can no longer affect the working capital requirements. Stay afloat by taking the help of online invoice financing in the UK to free up the tied-up cash. Continue performing the usual business operations with the help of this arrangement and ensure business growth.
Supporting credit control
The lender will take up your credit control roles. No need for you to shift focus to any activities that are critical for promoting your business. The lender will take care of this task regularly for the betterment of the business. You must focus on the core operations.
Allowing paying for what you borrow
Interest will be a levy on the amount you will borrow. The finance provider will not charge interest for the entire amount you owe in the invoice. You can pay less by borrowing less. It is because we work with lenders who do not charge fees other than interest rates.
Sponsoring essential payout
Get financial assistance to carry out essential business expenses. You will not face any restrictions regarding usage as you will have the liberty to address any financial issues your business might encounter by getting access to cash stuck in the invoice.
You should ignore the potential pitfalls despite feeling elated seeing the exclusive benefits. The disadvantages will tell if this financing option is a right fit for you or not by pointing out at the potential risk factors.
No scope for smaller companies
It is accessible for companies that fulfil the specific turnover requirement of £150,000. Your business will not qualify if it does not produce the required turnover. In short, smaller companies cannot take advantage of these funds.
These are short-term finances. Thus, the loan cost might be bulky for your business to afford. However, you can utilise the facility of loan comparison services arranged here to bag the most pocket-friendly loan offer.
Getting this financing cannot prevent the dangers of non-payment by your clients. Nevertheless, you can gather money based on the due amount on the invoice to tackle expenses for the time being and not for the long-term.
Trigger dependency on credit
The ease of access feature might tempt you to depend on it over and again. This can be fatal if you turn borrowing into a habit. Then, you will fall into an unavoidable debt trap and will question the financial stability of your business.
Receive acceptance if your client is a business
Your clients should be a business. It is a pre-requisite of this funding. You cannot apply for invoice financing if your client is a human being and not an entity. Checking basic requirements like this is mandatory if you want your business to qualify for this funding.
How much are invoice finance costs?
Your business will incur this cost to borrow this funding. It includes invoice finance rates that lenders will impose. The whole price will differ depending on the amount you take out for your business.
The financial stability of your business and customer base will have an influence on the cost. The two ingredients of the cost are:
Service fee: The cost you will pay for maintenance. Your turnover is a decisive factor in determining the amount of the fee.
Discount fee: Pay this interest fee on the borrowed amount. It counts upon the amount you will withdraw, irrespective of the time. You can save funds on such fee by repaying early. On the flip side, you will pay more by repaying late.
The calculating procedure for invoice factoring and invoice financing will be dissimilar. You might have to go through a hybrid calculation process where you will come to know about terms like factor rate. In the case of invoice financing, the business might have to bear interest and credit management fees at the same time.
The creditworthiness of your business is one of the prime factors that can influence the calculation of costs. Apart from this, the reputation of your venture, turnover and years of having the business (that should be at least more than a year) will play a role in determining the factor rate. In addition, your quality of clients is critical in determining whether your business can fetch a lower factor rate.
How does invoice finance work?
We are familiar with different businesses that exist in the market. However, invoice finance brokers like us usually have an all-rounder process to help them shortlist the best deal. This step-by-step method is the least time taking one and starts like this:
- Initiate an invoice request for the customer
- Forward the invoice copy to the lender
- Go through a review for the request
- Receive a decision from the lender
- Obtain money in your account after successful approval
- Wait for the customer to clear the invoice dues
- Collect the remaining amount of balance from the lender
Financial performance is a significant aspect of receiving a positive response from the finance provider. Although credit history is the least important, some lenders will be interested in analysing the bank statements of your business to see the difficulty level you are facing as a company. It also has a lot to do with the type of business you are having.
Which options to seek as alternatives of invoice financing?
If settling with invoice finance is not relevant for you, we have other alternatives in store for you. Check them out. Focus on your business condition before trying out any of these alternatives:
Trade finance: It applies to international trade. You have to place an order for goods. The finance provider will meet the payment in place of you. Repay once it reaches the desired receiver.
Recovery loan: This financing option is helpful for comparatively smaller-sized businesses without access to normal borrowing opportunities.
Credit insurance: A viable alternative to help you overcome the risk of receiving no payment from your client is credit insurance. It protects your business even if the client's business fails.
Export Funding: Consider utilising this type of financing if you are dealing with an overseas client.
Single Debtor Funding: This alternative helps you to receive financial help for the invoice of one client. You cannot get financial support for the total sales ledger.
Why choose thebusinessfunds?
We are one of the reputed invoice finance brokers looking forward to minimising your hard work in finding the right funding offer against pending invoices. With us, it is easy to search for the right lender. We work like a mediator between you and the invoice finance company. Our offerings will encourage you to get in touch with us.
Opportunity to Borrow at Optimal Rates: Receive different offers from different lenders. Assess and review to figure out the most affordable loan offer.
Our Market Knowledge: We study the market to help you meet a bunch of reliable and helpful lenders. You can utilise this facility without any second thought.
Any-time Access: We operate online. Therefore, we need not define any specified schedule as active working hours.
No Tension of Hidden Fees: You are free to pay us no surplus fees. Besides, we never appreciate unfair practices by charging hidden fees.
Speedy Comparing: You can shop around for best rates online. Therefore, unnecessary delays are not part of our process.