Do you want to scale up your business? If you’re looking for ways to grow without relying on people to pay on time, then Invoice Finance might be the answer. 

Finding the right Invoice Finance company and lender can be a real minefield, and that’s where we can help. At Navigate Business Finance, our in-house expert Mark Riches has over 19 years experience in the industry and can help you grow and invest your business with confidence. 

This blog uses Mark’s industry insights to explore the ways Invoice Finance can help your business, including the process we take so you know what to expect, from an initial introductory call right through to getting your loan secured.

Let’s dive straight in, so you can find out whether Invoice Finance is what your business needs.

Challenges of growing a business

Ask a small business what their biggest challenge is, and 9 times out of 10 they’ll say late payments. According to a survey by Zurich, SMEs in the UK are owed more than £255 billion by their customers. One in five are owed more than £25,000; one in ten are owed £100,000 or more, and one percent are waiting for more than £1 million.  

Many small enterprises are primed and ready to grow. They are profitable, viable and have a steady stream of customers. The demand for their products and services is there, so what’s the problem? The cash they need to buy more stock, new machinery and bigger premises is sat in their customers’ bank accounts.

Late payments are holding SMEs back because more and more businesses, particularly larger operators, are taking longer to pay their suppliers. Many are unable to grow at a healthy rate due to inconsistent cash flow. So what can be done?

How Invoice Finance can support small business growth 

Invoice Finance is well suited to funding small business growth. Here’s why:

No further debt – Invoice Finance provides small businesses with the working capital they need without having to take on long term debt. The only security required is the debtor book itself, and there are typically lower personal guarantees then overdrafts and loans.

Improves planning – Small businesses will know exactly when they will receive payments. This makes it much easier to plan for the future and take advantage of opportunities as and when they arise.

Risk averse – Invoice Finance is unique in the way the amount you can borrow grows in line with the business. As your sales increase, so will the amount of finance available. This makes it perfectly suited to small, fast-growing companies. 

Gives you back more time – As part of a factoring agreement, the finance provider will credit check prospects and chase outstanding invoices on your behalf. The result is that you have more time to concentrate on growth.

Frees up cash to spend elsewhere – Whether that means having the cash to buy new materials, invest in property or acquire a new branch, Invoice Finance can help free up cash to help your business grow.

Improves cash flow – Invoice Finance can get you up to 90% of your businesses invoices paid upfront, alleviating any cash flow issues.

Quick fire questions about Invoice Finance

Now we understand the key benefits to businesses, let’s answer some common questions about Invoice Finance:

Who can apply?

If your business trades with other businesses (B2B) rather than consumers, you’re likely to qualify for Invoice Finance. You’ll also stand to qualify if you are a limited company, and offer industry standard credit terms. Businesses normally need turnover levels above or predicted to be £100k +. 

Are start-ups eligible?

Yes. It can be used for start-up businesses as well as turnaround (i.e. gone through insolvency or in CVA). 

Any fees I should be aware of?

Fees are simple to understand and dependent on turnover and funds in use.

How much can I borrow?

Funding is available from £25k +. 

How quickly can I get the money I need to scale up?

Rather than waiting for 30, 60 or even 90 days to be paid for work you have already done, an invoice finance provider will pay up to 90 percent of the value of the invoice,generally within just 24 hours of it being issued. 

When is the balance of the invoice made available?

It’s available when the invoice is paid by the customer, minus the finance provider’s fee. Each client has the choice whether to borrow against the sales ledger as funds are made available but not forced to draw down.

Can Invoice Finance be used in tandem with bank facilities?

Yes it can, as it’s secured against the business book debts. 

Any other benefits to using Invoice Finance?

Yes! It can also allow for early settlement of suppliers and the ability to negotiate discounts.

In addition to this, funders can also look to extend further cash against Assets/Stock & Debtors to purchase a business or purchase shares.

How does it work?

At Navigate Business Finance, we understand how stressful running a business can be, which is why we offer a very easy step-by-step process from start to finish.

Our in-house advisor, Mark Riches, has over 19 years experience in the Invoice Finance industry. Mark will advise on the best product fit depending on your business profile. Here are the steps we take to help you secure finance for your business:

Make introductions – Via call or meeting to find out what your business requirements and needs are.

Review your documentation – We then request and receive financial information and review/discuss with the prospect business.

Present your business narrative – Using any financial information, we will establish your business narrative and present to funders. This will help determine if there’s an appetite to lend and give us an idea on price. We then present findings to the business and discuss.

Successful applicants – With help from ourselves, the business will decide which funders to move forward with. Introductions will then be made.

Meeting with funders – Funders will visit and undertake an initial meeting, and formalise an offer following the survey.

Completion – Once the offer is accepted, legal documents are raised. Legal documents are then signed and returned to the funder with the details of the outstanding sales ledger. Once the sales ledger is loaded and verified the client will check the sales ledger is accurate.

Client paid – You then receive your first payment amount so you can start growing business!

Could Invoice Finance help you realise the full potential of your business?

At Navigate Business Finance, there are lots of different finance options available. If your business needs support, get in touch with Mark Riches, our in-house invoice finance expert, to schedule an introductory call.