There’s no cause for concern. Firstly, over 40,000 UK businesses of various sizes use invoice financing, from start-up to £30M+ turnover. Secondly, it’s often possible to choose a confidential option, so your customers need not know how you’re staying on top of your cash flow.
It’s certainly cheaper than many other forms of business finance, which can include bank funding. In fact, many businesses find they save money on costs like employing a credit controller, telephone calls and so on. Healthy cash flow can also save on bank interest charges.
Naturally, there’s some paperwork to be completed before the facility is in place, partly to ensure the service is right for your firm. However, you should find that invoice financing results in less paperwork once it’s up and running, and you can often stay on top of your sales ledger online.
The actual figure will vary as the service is tailored to individual companies, but a typical figure is around 85% of each invoice.
No. You typically receive 85% within 24 hours, and the remaining 15% once the invoice is paid. The finance company receives a small pre-agreed fee on each invoice.
Typically, within 24 hours, depending on the provider, and often within a few hours.
An invoice financier will usually stop funding that invoice, but carry on with the administration for you. In the case of a customer becoming insolvent, for example, and unable to pay an invoice, the invoice may be assigned back to you. It’s possible to take out bad debt protection insurance if you’re worried about your customers’ ability to pay.
It’ll usually take 10 – 14 days, often quicker, depending on how fast you can supply the necessary information.
Short term contracts are usually 1 to 6 months. These are useful for testing the service, but many companies have been using invoice finance for over 10 years.
Some form of personal guarantee is a standard request in business finance, but as long as your business is trading as it should be, and in accordance with the contract this should not be a concern. The funder will rely on the debtors to repay the borrowing; no invoice finance company will want to enforce a personal guarantee unless absolutely necessary.