The benefits of invoice finance

Many small and growing businesses have taken advantage of invoice finance or factoring. 

• It’s typically very flexible, with the amounts you can borrow being linked to your sales ledger, not to a fixed amount.
• The amounts you can borrow can often exceed what’s available through an overdraft.
• It’s more accessible to businesses with weak credit histories or performance records.

It’s possible to set up an invoice finance arrangement very quickly, which is useful when your business is facing a cashflow crisis.

The disadvantages of invoice finance

There are situations where invoice finance may not be the most appropriate method of raising working capital.

• It’s not suitable for most businesses that sell to consumers. However, it can be very useful in B2B situations.
• A third party is being added to the relationship between supplier and customer, which can sometimes create administrative issues.
• Not all business owners feel comfortable using invoice finance.

The choice between an overdraft and invoice finance, as a way of raising working capital, comes down to numerous factors, making it impossible to generalise over which is better than the other.

How we help businesses raise finance

If you’re considering whether to take out an overdraft facility or set up invoice finance, we suggest you talk to a business finance specialist such as ourselves. We’ve helped numerous UK businesses find a finance solution that works for them. 

Rather than waste your time trying to decide what’s right for you, give us a call and chat through the options with one of our finance team.