Invoice Finance is best option

Under a typical loan arrangement , you sign away control of some (or all) of your accounts receivable as collateral against default on payments. With invoice finance, you retain full ownership of your invoices and receive 100% of your outstanding balance upon completion of a sale. It means you only have to pay back what you’ve received from customers , without handing over rights to future sales proceeds. This gives you maximum flexibility to do business without worrying about what your customer base is doing. You can concentrate on growing sales instead.

When you take out a loan from a bank, your personal credit score comes into play. If it’s low due to missed payments or other issues in your history, you may find yourself unable to borrow—even if you have good income and assets.  Invoice finance allows companies that otherwise might not qualify for loans to access capital right away. There’s no credit check required since invoice finance is considered a business transaction rather than an extension of personal borrowing power.

A lender can process your application for invoice finance and have funds available for distribution within 24 hours, which makes invoice finance very attractive in certain scenarios. For example, let’s say you need $10K to purchase inventory so that you can keep up with demand during peak season.  Without invoice finance , you may need to wait 30 days or more for a bank loan (if you can even get one) and then wait another 30 days before receiving payments from customers. With invoice finance UK, however, those funds could be in your account within 48 hours—which could be life-saving for seasonal businesses that depend on quick access to cash flow. 

Loans from banks typically come with variable interest rates, meaning your monthly payment fluctuates along with market conditions (like how much inflation there is). With invoice finance , though, you pay a set rate over an agreed-upon term; once again, your monthly payment doesn’t fluctuate unless you decide to refinance it down the line. That means more predictable costs —and less guesswork when preparing your budget each month. 

Banks look at several factors , including past financial performance and plans for growth when determining whether or not to extend financing to a business. Banks are often conservative in their assessment of whether a business will succeed. All of these factors make getting a bank loan difficult—and they also mean that there’s no guarantee that you’ll get one even if you qualify for it in theory. 

While invoice financing has been around for decades, its growing popularity can be attributed to a few factors. These include its flexible nature , allowing borrowers to pay off their invoices as and when they wish. In addition, invoice financing allows you to get approved for a loan without having to pay a lot of fees or premiums. Here are the five other main advantages of invoice financing .