Release Working Capital From Unpaid Customer Invoices
Invoice Finance UK – Improve Cash Flow and Fund Business Growth
Every day, thousands of UK businesses wait 30, 60 or even 90 days for customers to pay. Meanwhile, wages still need paying, suppliers expect settlement, HMRC deadlines do not move and valuable new business can be difficult to fund.
Invoice finance works differently. Rather than relying solely on historic trading performance or a fixed borrowing limit, it uses the value of eligible outstanding invoices to improve cash flow and release working capital already sitting within the business.
Go-Factor is an independent UK invoice finance broker and NACFB member. We arrange factoring, invoice discounting, confidential invoice discounting, selective invoice finance and single invoice finance through suitable funding providers.
For many businesses, invoice finance provides a more flexible way to improve cash flow than relying on an overdraft, taking a fixed loan or simply waiting for customers to pay.
What Is Invoice Finance?
Invoice finance is a working-capital facility linked to eligible unpaid business-to-business invoices. After goods or services have been supplied and invoiced, a provider may release an agreed percentage before the customer’s normal payment date.
When the customer pays, the remaining eligible balance is released after the provider’s agreed fees, reserves and adjustments.
What Cash-Flow Problems Can Invoice Finance Solve?
A profitable business can still experience cash-flow pressure when customers pay later than its own costs fall due. Moreover, growth can increase that pressure because a larger order often creates higher wages, supplier and operating costs before the extra income arrives.
Pay Wages and Payroll
Release working capital when employees, temporary workers or contractors must be paid before customers settle their invoices.
Settle Suppliers
Improve cash availability for stock, materials and supplier commitments while customers remain within their payment terms.
Take On New Contracts
Reinvest cash from completed sales into labour, materials and mobilisation costs for the next customer order.
Meet HMRC Deadlines
Strengthen cash flow when VAT, PAYE or other tax commitments arise before customers settle their invoices.
Manage Longer Payment Terms
Access working capital without asking customers to abandon their agreed 30, 60 or 90-day payment terms.
Support Continued Growth
Create a facility whose availability can increase alongside eligible invoiced sales.
How Does Invoice Finance Work?
- Goods or services are supplied. The business completes an eligible sale for another business or qualifying organisation.
- A customer invoice is raised. The invoice records the completed sale and agreed payment terms.
- The invoice is submitted. The provider may verify the sale and supporting documents.
- Working capital is released. Subject to approval, the provider makes an agreed percentage available.
- The customer pays. Payment is made through the collection process agreed under the facility.
- The remaining balance is released. Afterwards, the provider releases the remaining eligible amount after fees, reserves and adjustments.
Which Type of Invoice Finance Is Right for Your Business?
Invoice finance is not one standard product. The right structure depends on the business, its customers, contracts, credit-control arrangements and how often funding will be required.
Invoice Factoring
Factoring releases working capital and normally includes customer payment collection. Therefore, it may suit a growing business without a large credit-control team.
Invoice Discounting
The business normally retains control of customer collections. Consequently, it often suits established companies with reliable reporting and credit-control systems.
Confidential Invoice Discounting
Eligible businesses can release working capital while continuing to manage customer collections without routinely disclosing the facility to customers.
Single Invoice or Spot Finance
One eligible invoice can be funded without placing the complete sales ledger into an ongoing facility. This may suit an occasional cash-flow requirement.
Selective Invoice Finance
A business may fund selected eligible invoices or customers rather than every debtor. This can help where particular payment terms create the main pressure.
Specialist Invoice Finance
Recruitment, construction, export and contract-led businesses may need a provider that understands timesheets, certification, deductions or overseas customers.
Can I Get Invoice Finance Without My Customers Knowing?
Yes, confidential invoice discounting may be available to eligible businesses. The company keeps control of customer collections, while the funding arrangement is not routinely disclosed to customers.
However, confidential facilities usually require strong financial reporting, effective credit control and a suitable trading history. Go-Factor can discuss your business and introduce an appropriate funder if this type of facility appears suitable.
Which Invoices May Be Eligible?
Conventional invoice finance usually supports completed business-to-business sales. Therefore, the funder will consider the underlying transaction as well as the value shown on the invoice.
- Goods or services have already been supplied
- The customer has a clear obligation to pay
- The invoice is issued to another business or organisation
- Delivery, timesheets or completed work can be evidenced
- The invoice is not materially disputed
- The customer meets the funder’s credit criteria
- The sale complies with the contract and payment terms
What May Not Be Fundable?
Invoice finance does not normally fund a quotation, future order or work that has not yet been completed. Consumer invoices, disputed debts, deposits and sales with uncertain delivery or acceptance may also be unsuitable.
Construction applications, staged contracts and invoices involving retentions or rights of set-off require specialist funders. The funder will review the contract and supporting information before deciding whether an amount can be financed.
Can New and Established Businesses Use Invoice Finance?
Yes. Invoice finance can support new-start businesses, growing companies and established firms reviewing an existing facility. A limited trading history does not always prevent funding because the funder will also consider the customers and invoices.
Previous credit problems, CCJs or an earlier company closure do not always result in an automatic decline. Nevertheless, the complete background should be disclosed so Go-Factor can speak to a funder that may consider the circumstances.
How Much Does Invoice Finance Cost?
Costs depend on the facility, turnover, number of customers, invoice values, credit-control service and risk profile. Charges may include a service or management fee, a funding charge and fees for optional services such as bad-debt protection.
However, the cheapest headline rate does not always produce the most suitable facility. Customer limits, reserves, notice periods, minimum fees and contract terms can affect both the cash available and the overall cost.
Go-Factor Insight: Look Beyond the Headline Rate
The cheapest invoice finance quote is not always the best facility. Customer funding limits, reserves, minimum fees, notice periods and service levels can make a greater difference to the cash a business can actually use.
The right facility should release enough working capital today and continue to support the business as its sales and customer base grow.
Invoice Finance, Overdraft or Business Loan?
An overdraft normally provides a fixed limit, while a business loan provides an agreed sum that is repaid over a set period. By contrast, invoice finance links funding availability to eligible outstanding invoices.
Consequently, invoice finance can grow alongside qualifying sales. However, a loan or overdraft may be more suitable when the requirement is unrelated to customer invoices. A short conversation with Go-Factor can help identify which type of funding may be worth exploring.
How Go-Factor Helps
- We have a short, friendly conversation. Go-Factor learns about your business, customers and funding requirement.
- We speak to a suitable funder. Based on that conversation, Go-Factor identifies and approaches an appropriate invoice finance provider.
- We make the introduction. The funder explains the information it needs and takes the application forward with you.
Why Work With Go-Factor?
Finding the right invoice finance provider should not be complicated. Go-Factor starts with a short, friendly conversation to understand your business and what you need the funding to achieve.
We then speak to a suitable funder and make the introduction. The funder will explain what information is required and take the application forward. Go-Factor remains available to support the conversation and help move the funding towards completion.
Go-Factor is an independent UK commercial finance broker, an NACFB member and the 2023 NACFB Intermediary Excellence Broker of the Year.
Frequently Asked Questions
How quickly can invoice finance release cash?
Once a facility is active, approved funds can often be released shortly after an eligible invoice is submitted and verified. Initial setup takes longer because the funder must complete its checks and documentation.
Can invoice finance grow with my business?
Yes. Available funding can increase as the value of eligible outstanding invoices grows, subject to the agreed facility limits and customer approvals.
Do I have to fund every invoice?
Not always. Spot and selective invoice finance can fund one invoice or selected customers. Whole-ledger facilities are usually more suitable where funding is needed regularly.
Will my customers know about the facility?
Factoring is normally disclosed. However, confidential invoice discounting may be available where the business meets the funder’s operational and financial requirements.
Can Go-Factor help with an existing facility?
Yes. Tell Go-Factor what is not working with the current facility. We can then speak to a suitable alternative funder and arrange an introduction where appropriate.
How Much Working Capital Could Your Invoices Release?
Have a short, friendly conversation with Go-Factor about your business, customers and funding requirement. We will then speak to a suitable invoice finance provider and make the introduction.
Talk to Go-Factor About Invoice FinanceAll facilities are subject to application, invoice eligibility, funder checks, approval and agreed terms. Funding is not guaranteed.