Successfully Funding Thousands Of UK Limited Companies Since 1989
Require Immediate Support? Helpline 0800 056 0410
Invoice factoring is a flexible form of alternative funding that may be suitable for your business, even if you don't have good credit. It relies on the value of your sales ledger and can significantly improve the flow of cash every month.
In fact, factoring is a form of invoice finance that offers many benefits. These include speed of access to funds when compared with traditional bank lending, and the considerable time savings when the factor manages your sales ledger.
When you use invoice factoring as a method of borrowing you receive an advance on each eligible invoice that you submit. Around 90% of the invoice total is typically released within 48 hours, providing you with regular injections of working capital throughout the month.
The remainder of the invoice is sent by the lender once the customer has paid in full, minus the lending fee. This constant flow of cash into the business helps you plan with greater confidence and ensures that you can pay your day-to-day bills as they fall due.
Your access to regular working capital grows along with the business as you take on additional good credit customers and send out more invoices. So if you don’t need a good credit rating for invoice factoring, how do you know if you’re eligible?
One of the most advantageous aspects of invoice factoring is that, unlike some other forms of lending, you don’t need a good credit score to be eligible. This is because the lender isn’t relying on a monthly repayment – they’re using the value locked within your sales ledger.
The creditworthiness of your customers is more relevant for factoring companies, rather than your own business’ credit rating. Focusing on the credit status of your customers helps lenders to measure their risk of not receiving full and timely payment of an invoice.
When assessing your eligibility for invoice factoring, the lender will take into account how long you’ve been in business. They’ll also consider how long your customers have been in business, their history of timely payment of invoices, and overall creditworthiness.
A careful assessment is made of your customers’ payment patterns, how long you’ve done business with them, and whether there’s any history of late or missed payments. This means you don’t have to worry if your credit rating is poor.
UK Business Finance can guide you towards the best funding options for your business, and provide further professional advice on invoice factoring. Please contact one of the team to arrange a free consultation – we operate a network of offices around the country.
We work across a wide range of sectors throughout the UK, providing specialist advice to each sector.
Why use a commercial finance broker?
A commercial finance broker plays an important role for businesses looking for funding. They can source the most suitable types of finance using a whole-of-market search strategy whilst also accessing the best deals and lenders.
What are cash flow forecasts and why are these important when obtaining business funding?
Operating with positive cash flow helps your business to pay its bills, conduct day-to-day trade with minimal issues, and plan confidently for the months and years ahead. But how do you know that there will be sufficient cash available when it’s needed?
Good debt vs Bad debt
Managed well, debt can improve your credit rating, enable expansion, and stabilise cash flow. It’s the backbone of growth but with so many different types of borrowing now available, it’s important for your business to carry ‘good debt’ rather than ‘bad debt.’
How to best prepare my company for a finance application
When preparing your company for a finance application, it’s key to present the business in its best light whilst also providing realistic projections, your plans for the funding, and how it will help the business grow.