Factoring and Invoice Discounting Helpline

The following questions dispel some of the common myths surrounding invoice finance funding.

1. Will my customers think my business is in difficulties?
2. Is it expensive?
3. Is there lots of paperwork?
4. What percentage of my invoices are released upfront?
5. Do I only end up with 85 per cent of the value of my invoices?
6. How soon after sending an invoice can I access my money?
7. Do you credit check my customers?
8. What incentive does the invoice financier have to collect my invoices?
9. What if I don't want the invoice financier to chase my invoices?
10. Do invoice finance companies stop funding an invoice after 90 days?
11. How long will it take to put a facility in place?
12. How long are invoice finance contracts?
13. If things go bad, will you use my security against me?

1. Will my customers think my business is in difficulties if I use invoice finance?
   Many businesses worry that their customers will be concerned when they find out they are using an invoice finance provider. With over 40,000 businesses using invoice finance funding at all stages of their business lifecycle, there is actually no need for your customers to be worried. Many invoice finance providers now offer a confidential option, so your customers will be unaware of how you are funding your business.
2. Is invoice finance expensive?
   Invoice finance is certainly cost effective compared to other types of business finance. Compared to bank funds, the cost of money advanced through invoice finance is competitive. What is often forgotten in a straight comparison of charges is that businesses using invoice finance facilities benefit from significant related savings on a number of costly overheads, such as the cost of employing a credit controller, postage, stationery and telephone calls. And because invoice finance clients do not have to wait for invoices to be paid, they benefit from healthier bank balances, and save on bank interest charges.
3. Is there lots of paperwork need to take out an invoice finance facility?
   All financial agreements involve a certain degree of paperwork at the on set, to ensure that whatever facility is offered is right for your business. Once a facility is in place an invoice finance provider will actually remove some of the administrative burden placed on your business through the management of your credit control. Information is also available online to help you understand the day-to-day state of your sales ledger.
4. What percentage of my invoices is released upfront?
   As each facility is tailored to a business' own needs, this will vary. Generally though, an invoice finance facility will release anything up to 85 per cent of the value of outstanding invoices as you issue them.

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5. Do I only end up with 85 per cent of the value of my invoices?
   No. The 85 per cent is released within 24 hours of invoices being processed, the remaining 15 per cent is held until the invoice is paid in full and is then released to you, less a small agreed fee.
6. How soon after sending an invoice can I access my money?
   Again, this can vary from provider to provider but typically funds can be made available within 24 hours of an invoice being received. However, some providers are able to make same day payments.
7. Do you credit check my customers with an invoice finance facility?
   Many providers will conduct credit checks as part of the service they provide. This is especially important where one customer makes up the majority of work that you do.
8. What incentive does the invoice financier have to collect my invoices?
   The invoice financier has already advanced a percentage of the invoice value to you, so it's in their interest to collect the payment from your customer. Invoice finance teams want to achieve good results for their clients. Like any business if they fail to provide a good all-round service, their clients would be dissatisfied, and leave.

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9. What if I don't want the invoice financier to chase my invoice?
   Many businesses still wish to perform their own credit control services, so if you already have a strong system in place then you may want to consider the funding-only service, which is called invoice discounting. This means you can continue to chase your customers for payment.
10. Do invoice finance companies stop funding an invoice after 90 days?
    Generally, if an invoice finance provider has been unable to collect payment against an invoice, maybe due to insolvency or a dispute, they will usually remove funding against the invoice but continue to perform the administration on your behalf. In some circumstances the invoice will be reassigned back to you. If a business is concerned about its customers or their ability to pay it may wish to protect against non payment by taking bad debt protection.
11. How long will it take to put a facility in place?
    Typically a facility can be set up in seven to ten days, but it can be quicker, it's really down to how quickly you can provide information to your invoice financier.
12. How long are invoice finance contracts?
    Invoice finance is used on both a short term (e.g. 3 to 6 months) and long term basis, depending on the client's needs; some have used it for 10 years or more. There are some short term contracts available so businesses can test the service/facility before committing to a longer term contract.
13. If things go bad, will you an invoice finance provider use security put in place against me?
    Some people are concerned about supplying personal guarantees, but this is a standard request for most types of finance and is a commitment by you and assurance to the finance provider, that the signed agreement will be honoured by you. Invoice finance providers are in it for the long haul and nobody wants to enforce a personal guarantee. If the business is trading as it should and is in accordance with the invoice finance agreement, there should be no requirement to use the personal guarantee.

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For more information and to compare invoice finance quotes please call 0800 597 4757 or apply online.