Why Companies are Choosing Invoice Finance in the UK

UK businesses have an average of 26 unpaid invoices at any given time, which can mean missed payments and late fees—and just a general feeling of stress.  Fortunately, invoice finance is an increasingly popular solution to these concerns, as it allows businesses to grow by using their unpaid invoices as collateral. Find out more about UK invoice finance providers that can help your business today!

If you’re a small business owner looking to grow, it can be very difficult to get funding from traditional lenders. However, invoice financing is a great way for businesses of all sizes to secure funding and grow.  Many different companies offer these services; however, some key factors make one better than another. To learn more about which UK invoice finance company might be right for your business, read our guide above!

When a company offers UK invoice finance, it buys your outstanding invoices at a discount. When you have outstanding invoices on which you have not yet been paid, it can be tempting to borrow money from an invoice finance provider.    However, before you do, there are some things you should know about using these types of services. Remember that although companies make it easy to use their services online, invoice finance is still borrowing money—and any time you borrow money, there’s risk involved.  

You have several different options when choosing an invoice finance provider UK; your decision will depend on your specific needs. For example, if you have a regular flow of invoices coming in each month but don’t require immediate access to cash, then factoring might be best for you.  However, if you need cash quickly or don’t have enough invoices coming in regularly, then funding or asset-based lending might be better suited to your needs.

UK businesses often turn to invoice finance as a source of working capital, since they may need to make large upfront payments for inventory and other expenses. Understanding how it works is key to making sure you can make every penny count.  Here’s some of what you’ll want to know.

Let’s take a look at how invoice financing works. Essentially, when you sell goods to customers or clients, it can take some time for them to pay you back. This creates an invoice on your end that is owed by your client.  Then, instead of waiting for payment from that customer, a business invoice finance company buys your invoices and collects them on your behalf. As long as you comply with their terms and conditions, they’ll cover all payments due.  In return, you’ll receive a portion of those funds upfront. That way, you can focus on growing your business without worrying about collecting money owed to you. For example, let’s say you have $1 million worth of outstanding invoices and you sign up for a 10% advance rate.  If your UK invoice finance provider pays out $100,000 (10% of $1 million), then you’d have more cash flow available to put toward other expenses like salaries or marketing campaigns. This helps you grow your business faster than if you had to wait for eve...