Choosing The Right Invoice Finance Facility – A Guide For Businesses


We want to explore the importance of choosing the right invoice finance facility for businesses and provide a comprehensive guide on how to make the best decision.


Understanding Invoice Finance

Invoice finance is a financial solution that allows businesses to access cash tied up in their unpaid invoices. It provides a way to improve cash flow by receiving a percentage of the invoice value upfront, usually within 24 hours.

By understanding how invoice finance works, businesses can make informed decisions about whether it’s the right solution for their needs. It involves partnering with a finance provider who advances a certain percentage of the invoice amount and takes responsibility for collecting the payment from the customer.

Invoice finance can be a flexible funding option for businesses of all sizes and industries. It can help manage cash flow fluctuations, fund growth opportunities, and reduce the burden of chasing invoice payments.

Factors to Consider When Choosing an Invoice Finance Facility

When selecting an invoice finance facility, businesses should consider several factors to ensure they choose the right option for their specific needs. These factors include:

– Cost: It’s important to understand the fees and charges associated with the facility, including any hidden costs or additional fees.

– Funding availability: Businesses should assess the maximum funding limit offered by the facility and determine if it aligns with their funding requirements.

– Flexibility: Some invoice finance facilities may offer more flexibility than others, allowing businesses to choose which invoices to finance and when.

– Customer service: It’s crucial to partner with a finance provider that offers excellent customer service and support throughout the funding process.  Having said that, you need to decide if you want to be with a lender who is more or less hands on.

– Reputation and experience: Businesses should research the reputation and experience of the finance provider to ensure they have a track record of reliability and professionalism within the sector they operate.

– Terms and conditions: Carefully reviewing the terms and conditions of the facility is essential to understand any restrictions or obligations involved.

By considering these factors, businesses can make an informed decision and select the invoice finance facility that best suits their needs.

Types of Invoice Finance Facilities

There are different types of invoice finance facilities available, and businesses should understand the options to choose the most suitable one. The two main types of invoice finance are:

– Factoring: Factoring involves selling the unpaid invoices to a finance provider who then manages the credit control and collects the payment from the customers. This type of facility provides immediate access to funds and takes the responsibility of credit management off the business.

– Invoice discounting: Invoice discounting allows businesses to retain control over their credit management while accessing funds tied up in invoices. The finance provider advances a percentage of the invoice value, and the business remains responsible for collecting the payment from the customers.

Both types of facilities have their advantages and considerations, and businesses should evaluate their specific requirements and preferences before choosing the most suitable option.

Benefits of Choosing the Right Invoice Finance Facility

Choosing the right invoice finance facility can offer several benefits for businesses, including:

– Improved cash flow: Invoice finance provides immediate access to funds, helping businesses bridge the gap between invoice issuance and payment collection. This can significantly improve cash flow and enable businesses to cover their expenses and invest in growth opportunities.

– Reduced credit risk: When partnering with a finance provider, businesses can transfer the credit risk to them. This means that if a customer fails to pay, the finance provider takes responsibility for the loss.

– Time and resource savings: By outsourcing credit control and payment collection to the finance provider, businesses can save time and resources that can be redirected towards core operations and growth initiatives.

– Increased financial stability: Having a reliable source of funding through invoice finance can provide stability and peace of mind, especially during periods of economic uncertainty or seasonal fluctuations.

These benefits highlight the importance of selecting the right invoice finance facility to maximise the advantages it can offer to businesses.

Tips for Selecting the Best Invoice Finance Provider

To ensure businesses choose the best invoice finance provider, here are some tips to consider:

– Research multiple providers: It’s essential to research and compare multiple invoice finance providers to understand their offerings, reputation, and terms.

– Read customer reviews and testimonials: Hearing from other businesses who have worked with the provider can provide valuable insights into their level of service and customer satisfaction.

– Seek recommendations: Asking for recommendations from trusted industry peers or professional networks can help identify reliable and trustworthy invoice finance providers.

– Consider experience and expertise: Choosing a finance provider with experience in the business’s industry can be beneficial, as they may have a better understanding of the specific challenges and requirements.

– Evaluate customer service: Excellent customer service is crucial when partnering with a finance provider. It’s important to assess their responsiveness, accessibility, and willingness to address any concerns or questions.

– Understand the terms and conditions: Carefully reviewing and understanding the terms and conditions of the facility is essential to avoid any surprises or misunderstandings down the line.

By following these tips, businesses can select the best invoice finance provider that meets their needs and supports their financial goals.


Need a helping hand with your invoice finance facility– please get in touch – a friendly voice is at the end of the phone 0113 5182253 or email

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