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If you’re spending too much time chasing late-paying clients or have cash flow shortages caused by long payment terms, invoice finance could be the answer. It allows you to get your hands on cash that would otherwise be tied up in outstanding invoices almost immediately.
A few invoice finance products are commonly used in the UK - invoice factoring, invoice discounting and single/spot factoring. At UK Business Finance, we help you find the right product and personalise it to suit your needs. We then bring you the best quotes from the whole market and our service is completely free.
Invoice finance is a form of funding that uses your outstanding invoices as security. Rather than waiting 30, 60 or 90 days for a client to pay an invoice, an invoice finance provider will advance you 80-90% of the invoice’s value, typically within 48 hours. When your client finally pays the invoice, you will be paid the remaining 10-20% of the invoice’s value, minus the finance provider’s fee.
If you regularly invoice business clients and want to free up funds to boost your cash flow, invoice finance could be the answer. It’s also a potential funding option for businesses without physical assets to use as security on a loan.
Release cash early from outstanding invoices to access immediate working capital to fulfil demand
Advance payments tied up in invoices and retain full responsibility for payment collection
Release cash tied up in outstanding invoices of your choice to boost cash flow
Invoice finance works differently from traditional funding methods such as business loans, and that brings a useful range of benefits:
As with any business finance product, there are also a few things to consider. You’ll lose a percentage of every invoice you raise finance against, so that will reduce your profit margins. You’re also reliant on the creditworthiness of your customers. In some agreements, you can become liable for the shortfall if your customer doesn’t pay your invoice.
If you run a small business with few physical assets, want to avoid debt financing or have an adverse credit history, invoice finance could be a great option. To be eligible, typically you should:
Importantly, Invoice finance providers are more concerned with the creditworthiness of your customers than your business. So, if your business has an adverse credit history, you can still apply.
We can help you arrange invoice finance contracts from 30 days to three years. Just tell us your requirements and we’ll search the whole market to find the best deal. We’ll even complete the applications on your behalf. Request a quote or get in touch to benefit from our fee-free service.
We work across a wide range of sectors throughout the UK, providing specialist advice to each sector.
Can I use property as security for a business loan?
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Does my company have a credit score and how can I improve it?
Limited companies do have credit scores and they’re used for a similar purpose as individual credit ratings. Lenders use them as a guide to creditworthiness, but a business credit score is also useful for suppliers and investors to gain insight into your company’s financial situation.
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Bad debt presents an insidious threat to the financial stability of your business. It places strain on your working capital and creates uncertainty in paying your bills, but this can be addressed successfully if you take proactive steps to protect your company.
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