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Invoice financing is a flexible funding solution that allows businesses to unlock the value of their unpaid invoices. Instead of waiting for customers to pay, companies can receive an advance on a percentage of their outstanding invoices from a finance provider.
This type of financing helps bridge the gap between delivering goods or services and receiving payment, providing immediate access to working capital. This method of invoice funding can significantly improve cash flow, enabling businesses to cover operational expenses, invest in growth opportunities, or manage seasonal fluctuations without incurring long-term debt.
If you’d like to know more about invoice financing, an Articus Finance Broker can help.
Whether you’d like to make a finance enquiry or simply have
a question about our services, we’re on hand to help.
Many invoice finance providers set a minimum annual turnover threshold, often ranging from £50,000 to £250,000. This requirement helps ensure that the business has a steady stream of invoices to finance and that the arrangement is economically viable for both parties.
Invoice financing is designed for businesses that offer credit terms to their customers, typically 30, 60, or 90 days. This creates the gap between delivery and payment that invoice loans aim to bridge.
Lenders often prefer companies with at least 6-12 months of trading history. This allows them to assess the business's performance, stability, and ability to generate consistent invoices.
Lenders will assess the creditworthiness of your customers because they're effectively relying on these customers to repay the advanced funds. Businesses with a diverse customer base of reputable, financially stable clients are more likely to be approved.
While invoice financing is often associated with SMEs, larger companies can also use it to improve cash flow. Some providers specialise in working with larger businesses, while others focus on smaller enterprises or startups.
Manufacturing businesses can greatly benefit from an invoice finance facility due to their unique cash flow challenges. These companies often face large upfront costs for materials, equipment, and labour before they can even begin production. Once products are completed and shipped, manufacturers may have to wait 30 to 90 days for payment from their customers. Invoice financing bridges this gap, providing immediate access to working capital. This allows manufacturers to maintain steady production, take on larger orders, and invest in new equipment or technology without waiting for customer payments. Additionally, invoice financing can help cushion the impact of supply chain disruptions, which are common in the manufacturing sector.
The transportation industry, particularly trucking companies, is a prime candidate for invoice financing. These companies face immediate expenses such as fuel costs, driver payments, and vehicle maintenance, but often have to wait weeks or months to receive payment for completed deliveries. Invoice financing allows transportation companies to get paid quickly for their invoices, sometimes within 24 hours of submitting them. This immediate influx of cash enables them to cover ongoing operational costs, take on more jobs, and even expand their fleet.
Wholesale and distribution businesses often find themselves caught in a financial squeeze. They need to purchase goods in bulk from manufacturers, which requires a significant upfront investment. However, when they sell these goods to retailers or e-commerce companies, they often have to offer credit terms, leading to delayed payments. This mismatch in cash flow can severely impact a wholesaler's ability to maintain inventory levels and seize new opportunities. Invoice financing provides a solution by allowing wholesalers to get immediate cash for their outstanding invoices. This enables them to restock inventory quickly, take advantage of bulk purchase discounts from suppliers, and even expand their product lines.
The construction industry is notorious for its payment delays, often due to the complex hierarchy of contractors and subcontractors. Construction companies frequently have to cover significant upfront costs for materials and labour, but may not receive payment until long after a project is completed. This can create severe cash flow problems, especially for smaller firms. Invoice financing offers a lifeline to construction businesses by providing immediate access to funds based on their outstanding invoices. This allows them to pay suppliers and workers on time, take on new projects with confidence, and even bid on larger contracts that they might otherwise have to pass up due to cash flow concerns.
Invoice financing is a form of short-term borrowing that allows businesses to access funds based on the amounts due from customers on outstanding invoices. It can include different types of invoice financing such as invoice factoring and invoice discounting as well as other methods. This financial tool helps improve cash flow by enabling companies to receive money before their customers pay their balances in full. It’s particularly useful for businesses that experience gaps between providing goods or services and receiving payment.
The process of invoice financing typically begins when a business provides goods or services and issues invoices to its customers. The company then sends the invoice details to their chosen financing provider. Within a short period, usually around 48 hours, the business receives a percentage of the invoice value from the invoice finance company. The business continues to collect payments from customers as usual. Once customers pay their invoices, the business settles the account with the lender, paying back the advanced amount plus any agreed-upon fees.
Invoice financing offers several advantages to businesses. Primarily, it significantly improves cash flow by providing quick access to funds tied up in unpaid invoices. This improved liquidity allows companies to reinvest in their operations and pursue growth opportunities more rapidly. It’s particularly helpful in managing seasonal fluctuations in business, as it provides a steady cash flow even during slower periods. Invoice financing can also make businesses more competitive by allowing them to offer extended payment terms to customers without straining their own finances. Additionally, as the financing amount can grow with invoice volume, it’s a scalable solution that can adapt to a business’s changing needs.
While invoice financing can be beneficial, it does come with potential drawbacks. One of the main concerns is cost, as fees typically range from 1-5% of the invoice value per month, which can add up quickly. The reliance on customer payments can also make costs unpredictable, as delays in customer payments may lead to higher fees. It’s important to note that invoice financing may not protect against non-payment by customers, leaving businesses exposed to this risk. Additionally, this form of financing is generally limited to business-to-business (B2B) transactions, making it unsuitable for companies that primarily deal with individual consumers.
Using a broker for business loans can be beneficial for several reasons:
Eligibility for invoice financing typically depends on several factors. Generally, businesses that have creditworthy customers with a history of on-time payments are good candidates. The financing is primarily designed for companies that deal with other businesses (B2B) rather than individual consumers. Many lenders have minimum turnover requirements and prefer businesses that have been operating for a certain period. The ability to provide evidence of valid debts and correctly raised invoices is also crucial. It’s worth noting that specific eligibility criteria can vary between lenders, so businesses should check with individual providers for their exact requirements.
Articus Finance is a whole of market brokerage meaning we are not restricted by a panel of lenders. Using a broker for invoice financing can be advantageous for several reasons. Brokers bring expertise to the table, possessing in-depth knowledge of the invoice financing market. This expertise can be invaluable in helping businesses understand complex terms and conditions.
Brokers often have relationships with multiple lenders, which can increase a business’s chances of finding the best deal. They can save time by handling the application process, sparing businesses the effort of researching and applying to multiple lenders individually. Brokers are also adept at finding tailored solutions that best fit a business’s specific needs and circumstances.
Their industry relationships may allow them to negotiate better terms or rates on behalf of their clients. Furthermore, brokers can provide ongoing support throughout the financing process and as business needs evolve.
We recognise that every business is unique, which is why we offer a bespoke approach to invoice financing. Our dedicated team of professionals works tirelessly to ensure a seamless experience from initial enquiry through to funding. We prioritise rapid response times and efficient processing, understanding that in the world of business, time is indeed money. Our service doesn't end at the point of transaction; we provide ongoing support and guidance, adapting our offerings as your business evolves.
We believe that strong relationships are the bedrock of successful business partnerships. Over the years, we've cultivated an extensive network of lenders, each vetted for reliability and competitive offerings. These relationships allow us to secure favourable terms and rates for our clients. Moreover, we invest time in understanding your business, your challenges, and your aspirations. This deep understanding enables us to advocate effectively on your behalf, ensuring that the financing solutions we propose are perfectly aligned with your business objectives.
In the complex landscape of invoice financing, knowledge is power. Our team comprises industry veterans with decades of combined experience. We stay abreast of market trends, regulatory changes, and emerging financial technologies to provide you with cutting-edge solutions. Our expertise extends beyond mere number-crunching; we offer strategic insights that can help optimise your cash flow and drive business growth. When you partner with us, you're not just accessing funds – you're tapping into a wealth of financial acumen.
In the world of finance, trust is paramount. We've built our reputation on a foundation of transparency, integrity, and reliability. Our track record speaks for itself – we've helped countless businesses overcome cash flow challenges and achieve their growth targets. We adhere to the highest ethical standards, ensuring that all our operations comply with regulatory requirements. When you choose us, you can rest assured that your financial interests are in safe hands.
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Harry has over 16 years of experience within the Finance, Housing and Development sector. He started off his career as a CIMA Qualified Chartered Accountant and transitioned over to financial services in 2019. During this time he has dealt with a range of complex financial arrangements from ex pat mortgages to large development loans. Harry has a can do attitude and believes there’s a solution to every situation and will work tirelessly to ensure your deal crosses the line. In his spare time Harry likes to play poker, travel and try new cuisines.
Carolina is a multilingual Marketing Manager originally from Portugal. She specialises in International Marketing and Business, helping organisations expand their brand awareness globally over the last 4 years. Her past work includes supporting start-ups to multinational companies in the UK and across Europe. She is a creative and passionate individual, bringing a fresh perspective to the financial industry and delivering high quality research.
In her spare time, Carolina enjoys socialising & travelling around the world, embracing different cultures and experiences.
Antonia brings fantastic planning, organisational and time management skills to her role as office manager, ensuring that operations at Articus run smoothly. An experienced administrator with fantastic problem solving skills, Antonia began her career working in medical administration, so she is highly experienced working with confidential client data.
Matthew has experience working as a mortgage administrator and assisting with clients of any calibre. His main strength is his ability to develop a close relationship to his brokers and clients, allowing for a smooth transition throughout your mortgage journey, his friendly nature helps in making the process a lot less intimidating than it needs to be. Outside of work Matthew spends his time playing Chess and exploring the world with his Girlfriend.
Theo started his journey in the specialist finance industry while working as a journalist at an industry trade magazine. During this time he amassed a great knowledge of mortgages, bridging, development and commercial funding and established a wealth of relationships in the industry. He transferred these skills and now specialises in assisting clients with their specialist finance requirements. Working alongside the CEO, Theo has learnt the nuances of ultra-complex transactions and knows how to most efficiently manage the funding process to completion. Theo aims to achieve the best solution for every client he deals with a particular focus on sourcing funding for developments and refurbishment.
With over 20 years of financial services experience Dino is an accomplished mortgage adviser who relishes the more complex cases, enjoys a challenge and always does everything he can to ensure his clients not only get the result they need but to achieve their property goals. A fully qualified financial adviser Dino quickly realised that property and mortgages were his passion and over the years gained his experience helping investors build their property portfolios. When not working Dino enjoys spending time with his family, loves modern and classic performance cars, popular culture, technology, mountain biking and is a supporter of West Ham United.
Whether you require access to bespoke funding, or need to fund a project of any scale, Samuel will always find a solution to meet the requirements of any client. No matter how complex your case is, through his innovative and determined nature, he can find a structure to finance a client’s plans. As a trained martial artist, Samuel’s passion and confidence carries over into the workplace, and you can expect a clear and concise transaction journey from start to finish.
Jason started in 2012 in financial services working across London’s property and financial services markets for HNW individuals. He is able to construct tailor-made solutions to suit his client’s needs, no matter how complicated. He has completed multi-million pound residential, buy to let and commercial developments across the UK. Jason is a confident and motivated individual whom takes pride in offering an exceptional and professional level of service to all of his clients. Outside of work he enjoys hiking, cycling and traveling the world with his sights set on Base Camp Everest.
Assad prides himself on being open minded and thinking outside the box. Through a personalised approach and consistent communication; Assad’s strong relationships with specialist lenders gives him the ability to reach the ideal outcome for his clients. With a particular strength in dealing with foreign nationals and ex-pats he approaches his clients with a can-do attitude. His attention to detail allows him to actively support his clients and build a long-term relationship by giving a truly tailored approach. Outside of work, Assad is a keen explorer and foodie, regularly travelling to remote destinations and testing out the local cuisines.
Shyan is a global businessman with keen commercial acumen and a deep understanding of the UK property market. Following the successful completion of an undergraduate and postgraduate degree in Mathematics from King’s College London, Shyan has held a range of highly strategic roles, with a focus on UK property investment – meaning he is well versed in the world of HNW property finance. Not only is he an experienced UK landlord, he has an impressive history in the world of property trading, and has played a pivotal role in the completion of a number of large scale development projects with values up to £30 million.
Ollie entered the world of high net worth mortgages after living in Geneva, where he provided tailored financial advice to private clients. This experience shaped his career trajectory, giving him first-hand experience in understanding and communicating the benefits of financial advice – all while developing the ability to build exceptional client relationships. Following this, Ollie moved back to London where he began specialising in mortgages. His drive, ambition and natural flair for anticipating the needs of his clients led him to progress quickly from Client Services to broker, where he honed his skillset after passing his CeMap exams. Outside of work, Ollie is an avid traveller – and an equally keen supporter of his local club, Fulham FC.
Antonio has over a decade’s experience arranging and negotiating mortgage finance for some of the UK property market’s most complex transactions. During his career, he has worked at some of the UK’s most prestigious mortgage brokerages, as well as the fast-paced world of currency broking. As a result, he has a wealth of relevant experience in handling complicated cases, like clients buying properties through trusts. Crucially, Antonio has developed an almost unparalleled network of close industry relationships. This enables him to navigate challenging situations with ease, and he relishes taking on cases that have struggled to progress elsewhere and seeing them through to completion.
Antonio started in financial services in 2006, arranging and negotiating mortgage finance for some of the UK property market’s most complex transactions. During his career, he has worked at some of the UK’s most prestigious mortgage brokerages, as well as the fast-paced world of currency broking.
As a result, he has a wealth of relevant experience in handling complicated cases, like clients buying properties through trusts. Crucially, Antonio has developed an almost unparalleled network of close industry relationships. This enables him to navigate challenging situations with ease, and he relishes taking on cases that have struggled to progress elsewhere and seeing them through to completion.