Invoice Finance

Why Choose Capital Accountancy? Your Gateway to Invoice Finance

As Invoice Finance Brokers and Accountants we have a proven track record of securing both Invoice Factoring and Confidential Invoice Discounting arrangements for our clients with all the major banks and other Invoice Finance Providers in the UK, Europe and the US and across a diverse range of sectors, including temp and perm recruitment.

We can provide all the necessary detailed information needed to secure your invoice finance facility and accelerate your growth, but best of all we can do all the work for the lender at no cost to you.

Let us remove your stress now about your cash flow constantly holding your business back. 

Contact Stephen Langton on 07572 900628 or email [email protected] and let us assist you in achieving your financial goals. 

What is Invoice Finance? Unlocking Cash from Unpaid Invoices

Invoice finance allows you to leverage unpaid invoices as collateral to obtain immediate payment, whether from tardy payers or for urgent business needs. Typically, you can secure a percentage of the invoice value swiftly—sometimes within 24 hours. An invoice finance company typically provides up to 90% of the invoice value upfront, which can be utilized to bolster cash flow or invest in crucial business areas.

How Invoice Finance Works: A Five-Step Process

1. Invoice Issuance: You issue invoices to your customers, often with payment terms of 30 to 50 days.
2. Engagement: Once you set up the invoice finance facility, the company effectively purchases the debt your customers owe.
3. Advance Payment: The finance company advances a portion of the invoice value (up to 90%) to you immediately.
4. Client Payment: Your clients settle their invoices directly with the finance company.
5. Remaining Balance: After subtracting their service fees, the finance company provides you with the remaining balance.

Invoice Finance Example: A Practical Scenario

For instance, let’s consider Charlotte Contract Recruitment Ltd. Charlotte has seen a significant upturn in the demand for her IT contractors but as she is paying them weekly before receiving her 30 day payment, she is running out of cash to fund the increase in the number of contractors requiring payment weekly. This is a typical scenario when you an experience cash flow issues on the way up, commonly seen when there is an increase of cash out-flow on the growth curve because of the difference in payments and receipts timings. Here is how Charlotte remedied her cash flow problem due to this increase in the contractors out.

She’s owed £15,000 for the first week completed by her contractors  Opting for invoice finance, she secures 85% of the invoice upfront, Upon approval, she receives £12,750 in advance and the remaining balance (£2,250) upon her client’s payment. She can repeat this drawdown weekly allowing her to pay her contractors in advance, and even if she sees a further increase in the demand she can continue to fund the growth with ease.

Types of Invoice Financing

• Invoice Factoring: The lender assumes credit control, aiding in customer credit checks, particularly beneficial for smaller businesses.
• Invoice Discounting: You retain credit control, managing customer payments yourself, suitable for businesses preferring control over client relationships and credit management.

Exploring Invoice Financing: Accessing Cash with No Minimum Threshold

Invoice financing offers a flexible solution without a minimum threshold, allowing quick access to funds. However, for sums exceeding £1 million, alternative business finance may be more suitable.

Customer Payment Speed: Vital for Approval

Ideally, customers should settle invoices within 30 to 90 days. Delayed payments might impact your eligibility for invoice finance. Providers assess customers’ payment habits and credit ratings before approval.

Eligibility and Application Requirements

To qualify for invoice finance, meeting specific criteria is essential. Lenders consider factors like trading history, proof of invoicing clients, financial statements, and clients’ payment behaviors. At Capital Accountancy, our relationships with major banks and lenders offer both invoice factoring and discounting solutions, catering to various industries, notably recruitment firms providing temporary workforce solutions.