Our Experienced Consultants are Always Happy to Answer Any Invoice finance questions.With a wealth of experience from a variety of financial backgrounds, our experts are able to help you decide which invoice financing option is best for you.
What is invoice finance?
Invoice finance is the collective term for funding secured against unpaid invoices. In its simplest form it enables businesses to release cash from unpaid invoices.
Why use invoice finance?
The average UK business waits over 70 days to be paid for an invoice- this is known as a ‘funding gap’, and this means businesses can struggle to pay suppliers, employees and other costs during this wait. Invoice finance allows a business to borrow money from a lender against the value of the invoice in order to meet their everyday financial commitments.
Who is invoice finance suitable for?
Invoice finance may be suitable for any business that invoices clients. This includes all sizes of business, including start ups and high risk businesses.
What is invoice discounting?
Invoice discounting is used to bridge the funding gap. A lender will release 80- 95% of the value of an invoice when it is raised, and this is paid straight into a bank account. The remainder of the invoice is paid into your account once your client pays, less any fees. This type of facility is normally confidential so customers will not know a business is using it.
What is invoice factoring?
Factoring is similar to invoice discounting, in that a business is able to borrow around 80- 95% of the invoice value. The lender then acts as a credit control department for the business- meaning that they will issue monthly statements to clients, issue default statements and call them if they have not paid on time. This facility can also be used to protect you against some bad debts, subject to an excess. This type of funding is usually disclosed on each invoice to the client.
Why not just use an overdraft?
Whilst this type of funding was traditionally facilitated by banks, problems with the system mean that banks are often reluctant to give overdrafts to businesses. Invoice financing is far more flexible and offers funding for startups and those with cash flow problems. As the finance is secured against the value of the invoice rather than the business itself, it means that a business that has struggled financially or been through insolvency can still borrow. It is also a great catalyst for growth, as when the business starts to raise more invoices, the amount the business can borrow increases also.
What are the costs involved?
There are three main costs to invoice finance. The first is a service charge which is largely based on turnover and is dependent on the size of the business, the sector it is in, balance sheet value and the type of finance. The second is the discounting charge which is the direct cost from the amount borrowed. The third charge is variable and dependent on ony incidental charges like credit limit reviews.
Why choose Beacon Finance?
Beacon Finance not only offer a completely independent and unbiased approach to invoice financing, but also strive to secure you the best deal possible with market leading lenders. Our costs are usually recovered from the lenders we work with, meaning we normally take no fee from you, and all of the discount we secure is yours to keep. Our expert consultants are always on hand to answer any questions or queries, and to help you decide which invoice finance option is best for your business.
Which lenders do Beacon Finance work with?
We are completely independent brokers and have access to the whole of the market. In the invoice finance sector this means that we have access to in excess of 40 lenders.