A guide to Invoice Finance

Cashflow is the lifeblood of business.  Without it a business can find itself in a challenging situation where it can’t meet day to day operating expenses. At times cashflow can be affected by situations outside the businesses control such as late paying customers.  Spending time chasing late payments can be detrimental as its time that should be spent driving the business forward.

The answer? Invoice Finance.

What is Invoice finance

Invoice Finance is a popular financing solution for businesses of all sizes. It involves the use of unpaid invoices as collateral to secure funding, enabling a business to access cash otherwise tied up in outstanding invoices. 

With Invoice finance you can receive an advance payment of up to 90% of the invoice value within 24 hours, with the remaining 10% received after customer payment. It provides businesses with quick access to working capital, allowing them to invest in new projects and grow their business with confidence.   

There are two different types of Invoice Finance solutions.

Invoice Discounting vs Factoring 

Invoice Discounting is a finance only facility where you release funds from your outstanding invoices. The business remains responsible for chasing payments from their customers.

Factoring is a finance and sales ledger management solution. Similar to Invoice Discounting in that you release funds from unpaid invoices, but the sales ledger management solution sees the Invoice Finance company take responsibility for collecting invoice payments from customers.  In addition to this, they will conduct credit checks on all new customers giving you peace of mind that you will get paid.

How does it work?

1. Invoice your customers- then send us a copy
2. Receive up to 90% of your invoice value within 24 hours
3. The factoring company will collect payments on your behalf
4. Get paid remaining balance- minus our pre-arranged fees

Is Invoice Finance a good fit for your business?

Invoice Finance is a great funding solution for businesses struggling with cashflow issues. For example, a business may sell goods or service to their customer on credit terms ranging from 30,60 or even 90 days after the point of sale. This creates a significant payment gap where they aren't receiving payment, however, still must pay their suppliers, employees and other bills. 

What types of business can benefit from Invoice Finance?

• Businesses trading with other businesses on credit terms
• From start-ups projecting £350k in first year
• We support businesses from a wide range of industry sectors including manufacturing, transport, security services and construction
• Businesses buying products from overseas
• Wholesalers and Distributors
• Businesses selling to overseas customers

How can Invoice Finance benefit your business?

• Flexible funding: Access up to 90% of the value of each invoice as you raise them, enabling you to grow the level of funding in line with your business growth
• Saves you time and money: Our expert teams can offer you a credit control and sales ledger management solution leaving you free to get on and run your business. 
• Peace of mind: We carry out credit checks and offer an inclusive debt protection
• Bespoke client service: A dedicated client manager to support you and your business
• Negotiate trade discounts: With improved cashflow you can negotiate early payment discounts with your suppliers, boosting your profitability
• Transparent fees: A fixed transparent service fee, with no hidden costs so you stay in control
• Solutions to suit your business: Our solutions are flexible and we can offer a confidential service, so your customers aren't aware of our involvement. 

Client Success Story- Silo Facilities Management

Silo Facilities Management is a family run firm with over fifteen years of commercial experience specialising in silo installation, cleaning, and maintenance. In recent years the firm has been pursuing a growth strategy which has placed pressure on cashflow as they work to meet day-to-day operating expenses and month end payment commitments whilst investing in future plans. Having started discussions about how they fund their growth and the challenges they faced; their financial advisor recommended invoice finance as a funding solution that would benefit their firms cashflow. Pulse Cashflow were able to offer the £1million turnover firm a £130k invoice finance facility which would suppport thier objectives and underpin their growth plans.

“Our client manager is very helpful and assists us in every way he can to make our finances flow!  With the support of Pulse Cashflow, we have ambitions to grow our business and increase our success.  We are confident that we can grow our income by 20% this year and are looking forward to continuing that growth in future years”.  Sally Nelson – Financial Director

In Summary 

Invoice finance is a great funding solution for businesses that need to manage their cash flow more effectively. By accessing the funds tied up in their unpaid invoices, businesses can invest in growth opportunities, pay suppliers and employees, and meet other financial obligations.

Pulse Cashflow empower businesses with flexible funding solutions coupled with our bespoke client service, to help support business growth. We understand that every business is unique, and our team of experts are here to help you develop a tailored solution that meets your business’s needs. 

Get in touch today to discuss how our funding solutions can benefit your business. Call us today on 0845 539 7003 or alternatively email enquiries@pulsecashflow.com.