Did you know that invoice financing can swiftly bolster your cash flow?
Within just 48 hours of issuing an invoice, you can access a significant portion of the outstanding receivable value.
When your client pays, you'll receive the balance after accounting for some service fees.
This financial strategy has become increasingly popular, especially among small UK businesses navigating recent economic uncertainties.
Industries like transportation, retail, construction, and manufacturing, known for extended collection periods, find it particularly advantageous.
Here's the kicker: invoice financing might even eliminate the need for loans, credit cards, or overdrafts.
In the following sections, we'll delve into the best invoice financing companies, providing insights into their offerings.
So, if you're ready to unlock this financial secret, read on!
In an invoice financing arrangement, a business presents an unpaid invoice to a lender and promptly obtains a portion of its value, usually around 80-90%.
The business retains the duty of collecting payment from its customer and reimburses the borrowed amount to the lender along with a small, modest fee upon receiving the full payment.
Service Fee
Invoice financing companies impose a 'Service Fee' to account for the expenses incurred in pursuing and recovering outstanding invoices.
This fee is usually calculated as a percentage of your business's factorable turnover, ranging from 0.75% to 2.5%.
The exact percentage depends on the size of your business, and generally, the larger your turnover, the lower the percentage rate.
Smaller businesses often face higher service fees because they are considered higher risk.
Discount Charge
The discount charge resembles interest payments. While the invoice remains unpaid, you'll accrue interest daily until the invoice is settled.
This interest rate typically falls from 1% to 3% above the base rate.
Other expenses may include:
MarketInvoice, established in 2011, operates as an online invoice marketplace, connecting businesses with a network of investors.
Its strong emphasis on technology sets MarketInvoice apart from other invoicing providers.
It offers a streamlined and user-friendly online platform for the entire financing process, from application to payment.
Advance Rate: Up to 90%.
Minimum Client Turnover (Approx.): £100,000.
Application Process: A brief 5-minute online application.
Speed of Decision: Typically within 24 hours, subject to the specific product.
Customer Service: Highly rated, with a Trustpilot score of 'Excellent' (4.5/5).
Total Invoices Funded: Over £1.9 billion since its founding in 2011.
Investors and Partners: Includes the British Business Bank, PwC, and KPMG.
MarketInvoice offers a range of financial products, including contract finance, pay-as-you-go invoice discounting, and selective invoice discounting.
MarketInvoice distinguishes itself with clear and transparent fee structures based on factors like your company's size, expected payment dates, and total invoice volume.
Fees typically range from 1% to 3% of the invoice value.
They provide robust customer support through various channels, including telephone, email, and online chat, and offer the services of a dedicated account manager.
Bibby Financial Services boasts being one of the best invoice financing companies, having supported over 10,000 UK businesses for over three decades, managing a remarkable £5 billion annual turnover for these businesses.
Advance Rate: Up to 100%.
Minimum Client Turnover (Approx.): Not specified, but they cater to SMEs with turnovers under £300,000.
Application Process: Conducted online and via telephone.
Speed of Decision: Specific time frame not provided.
Their services include:
Bibby Financial Services sets fees based on your business's size, industry, and funding requirements.
They also offer support via phone, email, online chat on their website, and access to a dedicated advisor.
Additionally, Bibby Financial Services has received positive feedback, reflected in their 'Excellent' (4.5/5) Trustpilot rating.
Lloyds Bank Invoice Financing, a part of one of the UK's prominent "Big Four" banks, offers a range of invoice financing products tailored to businesses of varying sizes and needs.
They are known for their well-established brand and extensive national branch network.
Advance Rate: Up to 90%.
Minimum Client Turnover (Approx.): Invoice discounting is available for businesses with a minimum annual turnover of £250,000.
Application Process: Specific details about the application process are not disclosed.
Speed of Decision: Specific details regarding the speed of decision-making are not provided.
They offer various factoring types and specialized funding solutions for multiple industries, including construction, recruitment, and healthcare.
Lloyds' online platform, although considered dated, is still robust, allowing you to view available capital, inquire about declined funding, request funds, and access account statistics.
Their product offerings include:
Lloyds Bank Invoice Financing distinguishes itself with a unique offering:
You can also reach comprehensive customer support and get assigned a Client Service Manager to assist with your needs.
Skipton Business Finance, a division of Skipton Building Society, one of the UK's oldest building societies, offers a unique and localized approach to invoice financing.
Advance Rate: Up to 90%.
Minimum Client Turnover (Approx.): No minimum turnover requirement.
Application Process: Conducted via telephone.
Speed of Decision: Specific details about the speed of decision-making are not provided.
Skipton Business Finance provides a range of products, including:
They offer a fully transparent offering known as 'Skipton Select.'
This service charges no discount on invoices, no annual fees, and no transfer fees.
Instead, they impose a facility fee per invoice, which varies depending on your turnover.
Skipton Business Finance offers standout support with localized service in offices across multiple cities and a low client-to-staff ratio, providing direct access to Relationship Managers and Account Executives for personalized assistance.
Aldermore Invoice Finance, established in 2009, serves small and medium-sized businesses in the UK.
With over 37,000 business customers and a track record of providing £2.2 billion in funding, Aldermore is a notable player in the invoice financing sector.
Advance Rate: Up to 90%.
Minimum Client Turnover (Approx.): £250,000.
Application Process: Telephone application.
Speed of Decision: Decision speed varies, ranging from a few days to a few weeks, depending on your specific requirements.
Aldermore Invoice Finance provides a wide array of invoice financing services, including both discounting and factoring. You can also enhance these services with Bad Debt Protection.
Their offerings include:
Aldermore Invoice Finance offers several key features:
You can access Aldermore's customer service support via email or telephone during business hours.
Additionally, they have SME offices in various locations across the UK, making it a reputable choice for businesses looking for invoice financing solutions tailored to their needs.
You can apply directly with a finance provider or a broker, often online.
The process and required documents depend on the lender, your business, and financing type.
Typically, you'll need to provide customer details, invoice values, industry, annual turnover estimate, and financial statements for credit checks.
Bad Credit and Invoice Finance
Even with poor credit, invoice financing may be accessible because lenders focus on customer credit and payment history.
Business credit checks are standard practice, so improving your business credit score can lead to better terms.
Lenders often review bank statements to ensure your business isn't financially troubled.
Law Regulations
The invoice finance industry lacks regulation by the UK's Financial Conduct Authority (FCA).
To ensure ethical practices in lending, verify if the lender is a member of UK Finance, an association that enforces a code of conduct.
If you're working with a broker to secure the best deal, consider whether they are affiliated with the National Association of Commercial Finance Brokers (NACFB).
NACFB membership entails adherence to its code of practice, adding an extra layer of assurance.
While invoice financing is a type of asset-based financing, it covers only a portion of assets you can "trade" for cash, i.e., invoices.
But what if you are not comfortable with the cost structure of the invoice financing or have plenty of inventory around?
Myos has got you covered!
With financing solutions tailored to meet ecommerce needs, you can simply use your inventory as collateral without a personal guarantee or lengthy paperwork.
How Does It Work?
Myos uses an AI-based financing algorithm that considers your products as collateral. There are no fixed costs or personal risks, and you can repay anytime.
Getting Your Business Loan in Three Simple Steps:
1. Inquire: Start by filling in your product's ASINs or EANs and sharing how you scout and fulfill your orders. There is no need for documents or private data.
2. Receive: You'll receive an offer within 24 hours – it's that quick and easy.
3. Settle: After successful sales, you can settle part of the financing and release more inventory. This process continues until all products are fully released and the funding is settled.
We provide the funds you need for your business's growth.
You can access your capital at various stages – whether after production, dispatch, or the arrival of your goods.
Thus, you can start selling a partial amount of goods right away.
Myos follows a simple pay-per-use model.
There's no minimum term, and you won't encounter fixed fees. Your monthly fee is based on the outstanding capital, and the percentage fee varies according to your product scoring.
Importantly, if you decide to repay the funding ahead of schedule, you'll pay less without penalty.
Want to learn more?
Sign up and get a free, non-binding offer today!
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