FundInvoice | Invoice Finance Guide

Invoice Finance And Receivables Financing Guide

Welcome to our invoice finance guide which may be better described as a guide to receivables financing. It explains all the key information that you need to know if you are considering using this type of business funding or if you are already in an arrangement and are thinking about checking rates or moving providers.

Definition

It is difficult to find an independent definition of invoice finance online, which can also be referred to as receivables finance, factoring, invoice discounting, sales finance or supply chain finance. Wikipedia redirects you to the term "factoring", and the phrase does not appear in the dictionary. There are plenty of definitions from parties associated with the industry. A good definition is as follows:

"Invoice finance is a way for a business to borrow money based on
amounts due from customers that are businesses."

Invoice Finance

In very simple terms invoice finance means that a business can receive a "prepayment" against its unpaid sales invoices (typically between 70% and 100% of invoice value) so that they don't have to wait for their customers to pay. When the customers do eventually pay, the balance of the invoice, minus charges, is passed onto the business. Sometimes, you may hear these services referred to as "debt purchases".

If the business has a whole sales ledger of outstanding credit invoices, a large tranche of cash can be released in one go when the prepayments against each invoice are combined. Having this kind of financial facility in place can significantly improve the cash flow and working capital position of a business.

Invoice Finance Guide

The rest of this guide will explain the research we have undertaken regarding these products, the way they work and the different types of facilities that are available.