What is invoice finance?
In simple terms, invoice finance is an agreement with a financier to purchase book debts (invoices) at an agreed prepayment value, usually up to 90% of the invoice value, giving you access to cash for outstanding invoices. Once your customer pays the outstanding invoice, the financier is then repaid. This can allow you to utilise monies owed to you at an earlier stage, improving your company’s cashflow and helping to support growth. The most common types of invoice finance available are:
Confidential Invoice Discounting
- The involvement of the financier remains unknow to your customers and you stay in control of the credit control and ledger management process.
- The financier will include some credit control and ledger management, as well as financing invoices, leaving you with less to worry about. Factoring operates on a disclosed basis, so your clients will be aware of the financier’s involvement.
CHOCC – Client Handles Own Credit Control
- This is a hybrid between invoice discounting and factoring. Your clients will be aware of the financier’s involvement, but you are responsible for credit control.
- This type of financing may be available to aid your cashflow when selling to overseas customers.
Selective Invoice Finance
- As most invoice finance arrangements operate on a basis that all invoices are sold to the financier, this alternative can allow you to fund specific invoices relating to certain customers only.
Single Invoice Finance
- If you wish to simply choose specific invoices as and when you require financing, this may be a suitable option for your company.
Our sister company, FinCred IS, is a specialist trade credit insurance broking firm that works in partnership with FinCred CF to provide credit insurance policies to compliment your invoice finance agreement.
UK Wide Industry Statistics
Total value off all sales financed in the UK - £bn
Domestic invoice discounting - £bn
Total number of asset based lending clients
Domestic invoice discounting clients
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