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 cash flow and helping to support growth.
What Types of Invoice Finance are Available?
The most common options available from invoice financing companies are:
Confidential Invoice Discounting
The involvement of the funder remains unknown to your customers and you stay in control of the credit control and ledger management process.
The funder 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 customers will be aware of the funder’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 invoice finance may be available to aid your cash flow when selling to overseas customers.
Selective Invoice Finance
As most invoice finance arrangements operate on a basis that all invoices issued to your customers are funded by your finance provider, this alternative can allow you to fund specific invoices relating to certain customers only.
If you wish to simply choose specific invoices as and when you require financing but also wish to outsource parts of the credit control for those invoices, this may be a suitable option for you.
The various types of invoice finance and factoring fall under the umbrella of “receivables finance”. In other words, finance based upon your “accounts receivable”.
Working with Fincred CF as your Invoice Finance Broker
As an invoice finance broker trusted by clients across the country, it is our role to compare the range of invoice finance products across the market and select those that best fit your business.
With a wealth of experience, and taking into account your circumstances, we are well-equipped to advise and guide your business quickly to an ideal invoice finance solution.
When you are ready to find an invoice finance agreement, or if you just want to learn more, contact us.
Our sister company, FinCred IS, is a specialist trade credit insurance broking firm that works in partnership with FinCred CF to provide trade 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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