Invoice finance is a lending option that allows businesses to receive cash advances based on their outstanding invoices. It’s a popular lending option in the UK, especially for small and medium-sized businesses that struggle with cash flow. In this blog, we’ll take a closer look at invoice finance and how it can help businesses in the UK.
What is Invoice Finance?
Invoice finance is a financing option that allows businesses to receive cash advances based on the value of their outstanding invoices. Instead of waiting for customers to pay their outstanding invoices, businesses can get access to cash quickly by selling their invoices to a third-party lender.
There are two main types of invoice finance: factoring and invoice discounting. Factoring involves selling your invoices to a lender, who then takes over the responsibility of collecting payment from your customers. With invoice discounting, you retain control over the payment collection process, but the lender still advances you cash based on the value of your outstanding invoices.
Why Use Invoice Finance?
Invoice finance is a great option for businesses that struggle with cash flow. Waiting for customers to pay their outstanding invoices can put a strain on your finances, especially if you have bills and other expenses that need to be paid. By using invoice finance, you can get access to cash quickly and avoid any financial difficulties.
Another benefit of invoice finance is that it’s a flexible lending option. Unlike traditional bank loans, which can be difficult to obtain, invoice finance is available to businesses of all sizes and industries. It’s also a scalable lending option, which means that you can increase or decrease the amount of funding you receive based on your needs.
How Does Invoice Finance Work?
The process of obtaining invoice finance is relatively simple. First, you need to find a lender who offers this type of financing. There are many lenders in the UK who offer invoice finance, so it’s important to do your research and find the one that best meets your needs.
Once you’ve found a lender, you’ll need to provide them with information about your business and your outstanding invoices. The lender will then evaluate your invoices and determine how much cash they can advance you. Typically, lenders will advance you between 70% and 90% of the value of your outstanding invoices.
After the lender advances you cash, they will take over responsibility for collecting payment from your customers. Depending on the type of invoice finance you’ve chosen, your customers may be aware that you’ve sold their invoices to a third-party lender.
How Much Does Invoice Finance Cost?
The cost of invoice finance varies depending on the lender you choose and the amount of funding you require. Typically, lenders charge a fee based on the amount of cash they advance you, as well as an ongoing interest rate based on the length of time it takes your customers to pay their invoices.
It’s important to understand the costs involved in invoice finance before you decide to use this lending option. While it can be a great way to access cash quickly, it’s not always the cheapest option available.
Choosing the Right Lender
When choosing a lender for invoice finance, it’s important to do your research and find the one that best meets your needs. Look for a lender that has experience working with businesses in your industry and that offers flexible terms and competitive rates.
It’s also a good idea to read reviews from other businesses that have used invoice finance in the past. This can give you an idea of what to expect and help you avoid any lenders that have a history of poor customer service or hidden fees.
Get in Touch with Simply Factoring Brokers
If you’re interested in using invoice finance to improve your business’s cash flow, get in touch with Simply Factoring Brokers today. We’re a leading invoice finance broker in the UK, and we have years of experience helping businesses of all sizes and industries access the funding they need.
Our team of experts can help you find the right lender for your business, and we’ll work with you every step of the way to ensure a smooth and seamless funding process.
To learn more about how invoice finance can benefit your business and to get started with the application process, give us a call at 0333 772 1558 or visit our website at Contact Us. Our team is standing by and ready to help you take your business to the next level with invoice finance.