Invoice financing covers both factoring and invoice discounting, both of which are financing arrangements where the business can release capital from unpaid invoices.
When a business raises a sales invoice the banking partner can provide between 60%-95% of the value (including the VAT element) immediately, improving the cash flow position of the business.
Once the sales invoice is paid the provider makes the balance of the invoice available to the business.
Factoring is a disclosed facility, meaning that the customers know that the monitoring and collection of the invoices are managed by a third party. These types of solutions are often utilised by younger businesses as they establish their place in the business world.
Invoice Discounting in contrast is an undisclosed facility, where the end customer is unaware of the invoice provider. This service is for larger more mature businesses and can be across many sectors, including construction.
We work with our clients to establish the best relationships with lenders and ensure there’s a good fit with regards to the facility, fees and support.