Using invoice finance to support your business

One of the biggest challenges for any business is managing its working capital requirements, to ensure that there is sufficient cash within the business to fund day-to-day operations. This can be put under pressure by a variety of factors, such as an increase in orders, a change of supplier terms or inflation. In such scenarios, businesses will often look to utilise funding in order to support working capital, and invoice finance is one of the most popular facilities used to do this.

What is invoice finance?

Invoice finance is a working capital facility provided to businesses that sell on a business-to-business basis and frees up the cash tied up in these invoices, from the day the invoices are raised.

Features and benefits of invoice finance:

• Typically releases up to 90% of the funds tied up in invoices, with the balance available on payment by your customer
• Great for growing businesses as lenders will continue to increase available facilities in line with your receivables book
• Lenders can provide credit control, credit insurance and back-office solutions in line with the funding if required
• Security is provided by a charge over the receivables of the business (and occasional Personal Guarantee), so lack of security does not restrict access to funding 
• Can be selective or whole of debtor book facilities

However, the invoice finance marketplace is currently seeing a large amount of change, with several lenders looking to exit the market or significantly changing their offering. This has the potential to leave businesses without a vital funding facility.

Accessing invoice finance

Whilst the invoice finance marketplace is seeing change, there are a wide variety of lenders able to provide alternatives, all operating at different levels of facilities, varying credit appetites and some with sector specialisms. The best way to navigate through these is to engage with an invoice finance expert to ensure you obtain the most suitable facility.

Armstrong Watson offers a free independent invoice finance review for businesses looking to assess their existing facilities or seeking alternative providers.