Please note that an invoice finance facility is often more appropriate for long-term funding than an overdraft which is likely to cost more than an overdraft and be less flexible.
Overview of an overdraft facility
An overdraft is a borrowing facility attached to your bank account, set at an agreed limit. It can be drawn upon at any time and is ideal for your day-to-day expenses, particularly to see a business through cashflow problems.
- Difficult for new or small businesses to qualify
- Personal guarantees are needed to attain an overdraft
- Banks often request extra security such as charge on a directors home
- An overdraft is meant to be a short term source of finance and should not relied upon long term
- Overdraft can be ” called in” or cancelled or removed at any time
- An overdraft is only meant to cover the odd cash shortage and should not be over relied up as part of a business strategy
- An overdraft is flexible and you can liaise with your bank manager to open and close a facility on request.
- An overdraft is quick to arrange
- Overdraft can be expensive and actually very costly if a facility maximum passed.
- Interest and charges vary from bank to bank
- There are no charges for paying of an overdraft and cancelling the overdraft facility
- If an overdraft is extended often extra fees apply
- You can only seek an overdraft from the businesses main banker.
- An overdraft is to all businesses types.
Overview of an invoice finance facility
Invoice finance is a way of drawing money against your invoices.. It can provide a cost-effective way for businesses to improve their cashflow.
- Invoice finance is a long term arrangement, providing working capital security and will only ever be cancelled if a business seriously falls on hard times
- An invoice finance facility grows with turnover
- You can only seek an invoice finance arrangement from a bank separate from the business banking facility
- An invoice finance facility can be extended very easily
- Invoice finance is only available to businesses that sell products or services on credit to other businesses.
- Invoice finance is not necessarily the cheapest form of finance and can tie a business into a long contract.
For more information regarding invoice finance quotes please call 0800 597 4757 or apply online.
- Invoice finance overview
- Advantages of invoice finance
- How invoice finance works in practice in the UK
- Who is suitable to use invoice finance?
- What does invoice finance cost?
- Step by step guide to signing up to an invoice finance facility
- Common questions asked about Invoice Finance funding
- The benefits of using an invoice finance broker?
- Who can use invoice finance?
- Invoice finance quotes
- Finding the best invoice finance deal
- Invoice finance or business overdraft – that is the question?