Calculation of invoices using invoice finance

Invoice Finance is perfect for fast-paced growth

Invoice finance can make your cash flow match your current sales ledger, without having to rely on someone else’s payments: crucial if you work in a fast-paced sector that needs to be responsive to the latest trends.

It is one of the easiest ways to speed up and maintain your cash flow. With invoice factoring and invoice discounting, you will see up to 90% of your invoice, as soon as you issue it.

This is especially useful if you work in a sector such as retail where you need to snap up new stock or supplies at the best prices, but your clients don’t turn their invoices around quickly enough. It also works well in a technical field, where you need lots of equipment to fulfil large contracts.

The Essential Guide to Invoice Finance eBook banner

Definition of invoice finance

“Invoice Finance (invoice factoring and invoice discounting) is an arrangement where invoices are purchased by a third party for a fee, in exchange for immediate release of funds. The third party may be a bank or an independent financial provider.”

Types of Invoice Finance

If you’re wondering about the difference between invoice factoring and invoice discounting, it’s actually very straightforward. With invoice discounting, you issue an invoice, send your lender a copy, and they’ll pay you up to 90% of its value. When the invoice becomes due, you take full control of chasing it so your client relationships remain in your hands, and you send your lender the advance that they paid along with a small percentage fee. The types of invoice discounting we can source include:

It’s worth bearing in mind that Invoice Finance isn’t for all businesses. Usually, lenders will only buy commercial invoices, so if you generally sell to the public, Invoice Financing may not be for you. The good news is that if you do have commercial invoices, and you decide that Factoring is for you, then lenders will generally credit check your clients as part of their decision to accept the invoice. This means  you are more likely to deal with better-paying businesses in the long run.

If you choose invoice factoring, the lender can act as your credit control, freeing up some of your internal capacity so that you can concentrate on running your business. At Access, we can also offer a full credit control function. Including issuing invoices and chasing them when they are due. (which is carried out in a discreet, friendly way so that we don’t impact on your existing customer relationships.) When we have collected the balance of your invoices, we send you the remainder that’s outstanding, after our original advance and a fee.

In the post-recession climate, invoice finance can be a saving grace– it means you are not reliant on someone else’s cash flow to maintain your balance, and you don’t have to turn down lucrative opportunities because of a lack of working capital. It’s important to remember that whilst Invoice Financing is a great tool, you won’t get 100% of the value of your invoice, and there are fees and interest involved. So if you need to maximize your revenue, we may need to look at an alternative product for you. However, it is still a fast and simple way to quickly free up working capital on an ongoing basis, and because you are effectively selling your invoices, you will not need to be assessed before approval, and the responsibility for unpaid invoices remains with your client, not with you.

For every business, it’s an inevitable fact that a small percentage of invoices will never get paid, due to client insolvency, but with invoice factoring that worry is taken out of your hands. If we can’t collect payment even after our best attempts, as a last resort, we can make a claim against our credit insurance policy.

Invoice Finance tailored to your needs

With invoice finance, we like to get to know your business – our clients appreciate that we understand the way they operate and when the peaks and troughs in their sales are likely to occur. Invoice finance is provided as a revolving facility, so when one invoice is paid it frees up more credit to use as and when you need. To assess how much finance we can offer, we look at your whole sales ledger, across a full year, rather than just one invoice, so we can base our package on your typical sales performance.

Invoice finance is ideal for businesses with a fast turnaround of stock, such as retail suppliers, or industries with typically long payment terms. It can also speed up cash flow for any company that has regular ebbs and flows in its trade. Some of the solutions we have provided include:

  • Invoice finance for toy and merchandise suppliers
  • Invoice finance for advertising companies

Invoice Finance banner

Contact us today to find out if we can provide the cash injection that you need to put your ambitions into practice.

Our Latest Blogs

  • How To Better Manage Your Stock

    Your stock management runs parallel to your cash flow. Treat it right and it can grow in value, but manage it badly and you'll pay for it. Effective stock control affects how you manage your finances. To get it right and take advantage of your business opportunities means making your operations as streamlined as possible. You can start with managing your stock better and a clear benefit of doing so is more attractive finance opportunities with business funding in the UK.

  • How To Survive Employee Wage Demands

    How do employee pay demands affect business finance and how can you achieve happy, contented staff without having to pay through the nose to get it? We take a look at the issues affecting employers when confronted by employee wage demands and what you can do to put yourself in the best position to address them.

    Setting Employee Salaries

    Receiving increased wage demands from employees can be a delicate balancing act. On the one hand you risk paying them too little and losing talent to competitors, and on the other you risk paying them too much and crippling the finances of your business.

    Having the ability to set salaries correctly from the start is a benefit new businesses can control, and it can help align your business finances to cope with increases in the future, as well as ensuring that you are within industry-standard tolerances. If your cash flow is healthy and your finances are good, then you may consider paying above industry standard in order to attract the very best talent, but that still leaves you with the same increased employee wage demands in the future.

    Most business owners want to attract good talent and pay them fairly. But how can you set salaries that reflect the best-of-both-worlds scenario?

    Determining the relative value of each employee

    Ask yourself, 'how much value or revenue is each employee likely to bring in?' This should be the uppermost of what you can pay that employee.

    For a sales person tasked with generating revenue with a profit of £250,000 per year, you might well be looking at paying them £50,000 + commission and benefits.

    But the same formula might not be used for admin or support staff. Perhaps they don't make money, but they will save you some. Working out how much they can save your business is the key to working out their relative and fair salary expectations. It can certainly help you figure out the most amount of money their position is actually worth.

    Finding common ground in salary expectations

    There are many ways you can set about establishing either the market rate for that position or the least you are willing to pay them. Taking a look at similar jobs from online job-sites is one, and discussing employee wages amongst your networking meet-ups is another.

    The chances are you won't be willing to pay top-rate for candidates, but you probably won't want to pay the minimum either, because as the saying goes 'when you pay someone peanuts...'. It is highly likely that you will be looking at a salary somewhere in between, where you are more likely to find the best talent, willing to work for a mutually commensurate salary that fits in with your business finance projections and budget.

  • Tips For Managing Business Assets

    Your assets are not only important, but they also change during your business’s lifetime. Identifying, monitoring and keeping track of them can help you when it comes to assessing your business funding opportunities in the UK.

    Business Assets Are Important

    Business assets add value to your business. Your assets can be both tangible and intangible and at first sight they do two jobs, firstly they can help you get business funding by helping to secure finance, and secondly they are the intellectual driver of your business idea.

  • How To Plan For Auto-Enrolment With Business Finance

    For many SMEs and business owners the prospect of setting up the workplace pension scheme has been fraught with additional costs, labour time and effort. But the risks of not doing so are much heavier. Here is a guide to how auto-enrolment dates will affect your new business and how you can use small business finance to balance the costs.

Hot from Twitter

NACBF logo
Contact Access Commercial Finance Today