As a new business can I use an invoice finance service?

Invoice finance products such as factoring and invoice discounting can be very useful to help young businesses and start ups but it may not be a suitable type of commercial finance for all companies. The most obvious thing about invoice finance is the “invoice” part – money can only be raised against invoices raised to other businesses. This means retailers and those companies who deal with the public cannot use factoring or invoice discounting.

Factoring is usually the best type of invoice finance for younger companies due to the factor offering additional services such as debt collection, ledger management and credit control services. In some cases using a factoring can allow you to avoid employing a financial controller meaning cash is being saved in addition to the options created through increased cash flow.

Invoice discounting is being provided in increasing volumes to smaller and younger companies as lenders begin to understand the market more but is usually not offered and must be requested.