Invoice Finance

Particularly handy for paying bills, funding growth or just releasing working capital that’s tied up within your trading cycle. You’ll lose 1-3% of the invoice amount per month as a fee.

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Beware the honeymoon rates that are used to get your business. For regular use, expect to pay service charges of about 1.75% of gross turnover. You’ll need a quicker decision on initial funding and then flexibility to increase funding and credit limits. Alternative funders have fewer clients, so decisions are made as part of a personal service. Businesses whose trading cycles rely on prompt payment of invoices can then free up working capital for investment in stock, and speed up the contracts and orders cycle. As part of this service, you can outsource credit control and collections, freeing up valuable time. You can cover yourself against bad debts with credit protection. All credit scores are welcome, as the invoice is used as equity. Approval can be very fast: a few days, sometimes hours.

What is Invoice finance?

An Invoice Finance facility cashes your invoices within 24 hours. Your client then repays the Invoice Finance facility at a later date.

Improves cash flow.

Frees up time spent chasing customers for payment.

Covers you against bad debts.

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Selective Vs Whole Turnover

Selective

Select which customers to receive immediate payment from.

More flexible but higher interest.

Only pay on some invoices when it suits

Whole Turnover

Take control of the front end of your buying cycle and function with payments in real time.

A new dynamic to the way you trade.

Factoring Vs Discounting

Factoring

Lender funds against individual invoices on a case by case basis (the higher the credit rating of your customer, the lower the interest you would pay) (risk/reward). Credit control required.

Discounting

Lender funds against your total ledger, which can be uploaded electronically, basic accounting packages required as more monthly reporting is needed by the third party lender. No credit control as it’s all internal.

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Recourse Vs Non Recourse

Recourse

You must repay the Invoice Finance facility if your client defaults.

Non Recourse

Bad Debt Protection.

ay the Invoice Finance facility if your client defaults.

Single Invoice Finance

With single invoice finance, you can pick which individual invoices are funded on an ad hoc basis.
This allows for total flexibility but a higher service fee against the invoice (2-3% of gross invoice value every 30 days).                  

You can employ this facility with or without CHOCCS.

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Single Fee Vs Normal Fee

Single Fee

Most invoice facilities charge a service fee (percentage fee against gross invoice value) and Discount or Finance Fee (annualised interest rate on money borrowed).

Normal Fee

For businesses that wish to know exactly how much the costs are per invoice for budgeting purposes etc – a ‘single fee’ or ‘bundled fee’ is an option. This is a higher service fee percentage with no interest rate.

Invoice Finance via Traditional Business Banking Vs Invoice Finance via Alternative Business Banking

Invoice Finance via
Traditional Business Banking

You might be viewed as a business in distress, due to banks’ classifications for their customers.

Invoice Finance via
Alternative Business Banking

No stigma, independent service. More competitive pricing. Access to data and verification techniques.

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