The invoice finance market is a diverse and competitive place. With over 80 funders providing invoice finance it can be very confusing and time consuming to find the right one that meets your needs. Engaging an expert can ensure you have a much greater chance of getting that right fit for you.
Invoice finance is a flexible form of funding, which releases cash tied up in outstanding customer invoices. There are two main types of invoice finance: Factoring and Invoice Discounting.
Specialist Sector Finance
This option provides funding as with factoring but also an outsourced payroll function assisting clients in the recruitment sector.
Construction Finance offers cash advances against outstanding billing allowing you to access money earlier, rather than waiting for customer payment. Funding can be generated against uncertified applications for payment or interim invoices and is often provided with a confidential credit control and sales ledger management service enabling the client to maintain their existing customer relationships.
Asset Based Lending (ABL)
Asset based lending (ABL) enables larger businesses to raise higher levels of funding, ideal for MBO or MBI transactions and for releasing additional working capital, for use in growth or turnaround profiles. Assets that are typically leveraged with an ABL facility are:
Bridging finance is used when there is a need to bridge the gap whilst longer-term financing can be secured. Funders often provide a fast, flexible and, transparent short term finance that will support them all the way through to securing long-term finance.
Often considered as a funding solution used in the property market there are other bridging facilities available for trading businesses where there is a short-term working capital requirement, which can be secured against existing assets or positive cash flow.
This can provide upfront funding against confirmed orders, open up letters of credit facilities on your behalf, and provide direct supplier payments or even a cash advance. It is suitable for businesses who have confirmed purchase orders/supply contracts from reliable sources. You can secure stocks but you have limited working capital to fund the purchase.
How does it work?
Using a Trade Finance facility is straightforward:
- Place your order with your supplier
- The Trade Financier will pay your supplier against shipping documentation or open a letter of credit for up to 100% of the purchase price of the goods
- The goods are shipped and ultimately delivered to the client’s customers
- The client will repay the transaction either by way of:
- Within 90 days from the transaction date
- Through a linked to invoice finance facility