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The Benefits of Invoice Finance for Start-ups

24/07/2019 / Comments 0

Finding the right funding is mission critical for start-ups as they bid to get off the ground and keep cash flowing while establishing their business.

As a specialist finance broker, we help business of all sizes to find their perfect funding match – including start-ups. While invoice finance is ideal for many companies we speak to, it’s perhaps even more so for businesses at the smaller end of the spectrum – with many of its benefits solving some of the most common challenges a growing company may face.

Similarly, for a lot of fledgling businesses, invoice finance can provide a scalable and flexible funding solution that can see them grow from the early start-up stage and establish themselves as a financially stable and fast-growing SME.

What is invoice finance?

Invoice finance allows businesses to release up to 90% of the value of invoices within 24 hours of their issue. The main benefit of this is that it overcomes the cash flow gap that’s created by trading on credit terms, providing the cash to fulfil new orders and meet day-to-day commitments.

There are several types of invoice finance to consider:

Invoice Factoring

As well as releasing up to 90% of the invoice value, factoring also provides companies with dedicated sales ledger management. This can release the burden of chasing customers’ invoices and bring crucial expertise to your start-up.

Invoice Discounting

The key difference between factoring and invoice discounting is that your company retains the task of managing your sales ledger when you choose invoice discounting. This could be beneficial if you want to maintain touch points with your customers in order to build stronger relationships, however it’s usually only available to more established businesses – typically with a turnover of more than £1 million.

Spot Factoring

Spot factoring allows businesses to access up to 90% of the value of individual invoices as opposed to their entire sales ledger. This gives you more flexibility and means you will not be tied into a long-term funding facility, but can still give your cash flow a boost where you need it.

If you aren’t sure which option might work best for your start-up, talking through the choices with one of our funding consultants can help you to make the best decision based on your requirements.

Why is invoice finance a good choice for start-ups?

There are many reasons that invoice finance can be a great choice for recent start-ups.

Improving your cash flow and ensuring you have more liquid cash means that you’ll not only have the funds you need for day-to-day operations, but you’ll also be able to invest in growth.

You may want to expand your team, develop a new solution or take on new clients, and with invoice finance there are no limitations to what you spend your released cash on.

Invoice finance also offers a level of scalability that you don’t always get with other funding solutions, like overdrafts and loans, as it will grow alongside your sales ledger.

Download The Ultimate Guide to Business Finance For Start-Ups

Is my start-up eligible?

Your business will need to offer credit terms to customers and sell to other businesses to be eligible for invoice finance. Of course, you must raise invoices, as this is the collateral against which the funding is secured.

One of the reasons why invoice finance is great for recent start-ups is that the funding depends on the creditworthiness of your debtors and the quality of your outstanding invoices, as opposed to your trading history. This makes it a popular option for new companies as they may not have the history behind them to secure more traditional forms of funding such as bank loans.

If you’re looking for the right funding to support your growth, get in touch with our funding experts on 0800 9774833, or get an instant quote to see how invoice financing can support your business.


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Some of the funders we work with

  • Team Factors
  • PNC Business Credit
  • Aldermore Invoice Finance
  • Innovation Finance
  • ABN AMRO Commercial Finance
  • GapCap Cashflow Finance
  • Partnership Invoice Finance
  • Asset Advantage
  • Nucleus Commercial Finance
  • 4Syte
  • Royal Bank of Scotland
  • Haydock Finance Ltd
  • 1pm
  • Pulse Cashflow Finance
  • Spotcap
  • Calverton Finance
  • Metro Bank SME Finance
  • Skipton Business Finance
  • Roma Finance
  • Catalyst Finance
  • Lloyds Bank Commercial Finance
  • Investec
  • Giant
  • InvoCap
  • Creative Capital
  • Shawbrook Business Credit
  • Positive Cashflow Finance
  • Davenham Asset Finance
  • Davenham Trade Finance
  • Bibby Financial Services
  • Santander Corporate & Commercial
  • Boost Capital
  • Trade Finance Partners
  • Market Invoice
  • Regency Factors
  • IGF Invoice Finance
  • Merchant Money
  • Leumi ABL
  • iwoca
  • Secure Trust Bank
  • Barclays
  • Ultimate Finance Group
  • Close Brothers Invoice Finance
  • Woodsford Tradebridge

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We are a credit broker and not a lender and offer credit facilities from a panel of lenders

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