Customers Owe You Money. Why Take an Expensive Business Loan?
A business loan can appear on your screen in 30 seconds. That does not make it the right funding solution. If your cash-flow problem exists because business customers have not paid, taking an expensive short-term loan can add another monthly or weekly repayment without solving the reason your business is short of cash.
Invoice finance takes a little longer to arrange, but it can release working capital from eligible unpaid B2B invoices and create a revolving facility that grows with your sales.
Go-Factor can obtain an indicative invoice-finance offer the same day and get the facility in place in one week.
Before You Accept the Loan, Check Your Invoices
Send Go-Factor the loan offer and your aged-debtor report. We will compare the repayment commitment with the cash your unpaid invoices could release.
Compare the Loan With Invoice Finance
Quick Answer
If unpaid B2B invoices are causing the cash shortage, do not automatically fix the problem with another loan. Invoice finance could release the money already tied up in your sales and provide continuing funding as new invoices are raised.
Why Is the Loan So Easy to Accept?
Online business loans are designed for speed. Enter a few details and an offer can appear almost immediately.
That speed can feel like the answer when wages are due, suppliers are chasing or the bank balance is falling. But a fast approval should not replace a proper comparison.
The important questions are not only:
- How quickly can I get the money?
- How much will arrive in my bank?
You also need to know:
- What is the complete amount I will repay?
- How often will repayments leave the account?
- Will the repayments make next month’s cash flow worse?
- What happens when the money runs out but customers still have not paid?
Business Loan Versus Invoice Finance
Short-Term Business Loan
- Provides a fixed amount of money.
- Adds a new repayment commitment.
- Repayments may begin immediately.
- The available cash reduces as the loan is spent.
- Another loan may be needed when the original money runs out.
- The headline offer may not make the complete repayment cost obvious.
Invoice Finance
- Releases cash from unpaid B2B invoices.
- Can provide continuing revolving working capital.
- Funding can increase as eligible sales increase.
- Directly addresses the delay between invoicing and customer payment.
- Can support wages, suppliers, fuel and growth.
- Can be structured around how the business trades.
Why Can Repeated Loans Make the Problem Worse?
A fixed loan provides a temporary injection of cash. If customers continue taking 30, 60 or 90 days to pay, the same cash-flow gap remains after the loan has been spent.
The business may then accept another loan while still repaying the first. The result can be several repayments leaving the bank account before customer money arrives.
Some online enquiries can also lead to repeated calls, emails and further loan offers. Constant access to more borrowing is not the same as having the right funding structure.
Go-Factor insight: If the problem repeats every time you raise an invoice, the funding solution should revolve with those invoices. Another fixed loan may provide cash today while making tomorrow’s position harder.
How Could Invoice Finance Break the Cycle?
Raise the Invoice
Complete the work and invoice your business customer on its agreed payment terms.
Release the Cash
The provider releases an agreed percentage without waiting for the customer’s payment date.
Keep Funding Sales
As further eligible invoices are raised, additional funding can become available.
This is why invoice finance can be particularly effective for recruitment, care staffing, haulage, cleaning, manufacturing and distribution businesses. These companies often pay wages, fuel, stock or suppliers well before customers settle.
Will Invoice Finance Always Be Better Than a Loan?
No. A loan can be appropriate when a business needs a fixed amount for a specific purpose and has a clear route to repayment.
But if the cash shortage is caused by customers paying slowly, invoice finance should be compared before the business accepts a high-cost short-term loan.
Go-Factor will look at why the money is needed, how the business generates cash and whether the sales ledger can support a stronger revolving facility.
Do Not Send the Enquiry to Every Lender
One hurried online application can result in numerous calls and offers without properly comparing the funding structures.
Speak to Go-Factor first. We will assess the requirement, compare the loan with invoice finance and approach a controlled shortlist of funders suited to your funding requirements. Fast. Flexible. Funding. Built around your business.
Learn more about invoice finance for UK businesses .
Customers Owe You Money? Do Not Automatically Take Another Loan.
Send Go-Factor your loan offer and aged-debtor report before you sign. We can compare the complete repayment commitment with the cash your invoices could release, obtain an indicative offer the same day and get invoice finance in place in approximately one week.
Compare the Loan With Invoice Finance
