Invoice finance

Not necessarily, whilst your business’ credit history is taken into consideration, the credit focus is instead on the credit quality and repayment history of your customers. 

This makes invoice financing a great option for new businesses that don’t have an established credit rating or trading record yet. 

Invoice financing is a form of financial service that enables businesses to obtain immediate cash flow by leveraging their outstanding invoices. 

Rather than waiting for clients to pay invoices, which could take weeks or months, a company can sell or utilise these invoices to secure funding from a financial institution or invoice finance provider.

Invoice finance solutions can help businesses improve their cash flow, maintain smooth operations, and invest in growth opportunities by providing immediate access to working capital that would otherwise be tied up in outstanding invoices. 

Invoice finance can be a more cost-effective and flexible form of borrowing for businesses that need to access funding quickly and efficiently.

Before you finalise any contracts relating to these services, you should always disclose what happens if a debtor refuses to pay an invoice. 

The most cost-effective solution would be for you to return the full amount of the cash advance, within an agreed period of time. This is known as recourse factoring and your business becomes liable for the unpaid invoice. 

Another option is non-recourse factoring. In this instance, the factoring company takes responsibility for any non-paying customers and they cannot ask you for payment. However, as the lender takes on more risk, the deductible factoring fees can become much higher. 

Nevertheless, factoring companies have a team of professionals who dedicate themselves to collecting the client’s late payment in the most efficient way possible. Not only this but invoice financing companies will vet your clients thoroughly before agreeing to advance their invoices.

Invoice financing doesn’t take long to set up at all, especially in comparison to other forms of financing in the UK. 

After your first appointment, your business could start using these services in as little as 24 hours. 

Once you are all set up, you can get access to your funds in just a matter of 24 hours.

Yes, invoice financing is an ideal solution for start-ups. 

Unlike traditional forms of financing, such as a bank loan or overdrafts, this doesn’t demand you to be a well-established business with an immaculate credit rating to receive the finance you need. 

It focuses on the credit quality of your customers instead, making it a highly viable solution for start-ups and SMEs. 

This form of financing also helps new and emerging companies quickly convert credit sales into cash, which can help fuel growth and accelerate the development of your business.

The checks on your own business are rather limited, instead, invoice finance companies focus on checking the history of your customers. 

Lenders will make sure your clients have a substantial credit score and reputable repayment history before they agree to finance any invoices. 

This makes it much easier for new businesses and smaller companies to qualify for invoice financing than it is for them to secure loans from the bank. 

Nevertheless, if your business has a strong credit score, steady turnover, and a considerable reputation, you will most likely benefit from more favourable rates.

No, invoice financing is not regulated by the Financial Conduct Authority (FCA) in the UK. 

Since the invoice finance industry is unregulated, borrowers should ensure all contracts have a clear termination clause and that all fees are clearly stated. 

However, the sector has established a clear code of conduct to ensure the best possible service. Not only this but being an unregulated industry removes the costs of regulation that are typically passed on to customers, allowing business owners to receive the maximum amount of cash in the shortest amount of time.

Yes, small businesses can benefit greatly from invoice financing. 

However, to be eligible for the service you must be a business invoicing other businesses with a minimum turnover of £50,000 a year. If so, Sonovate provides invoice finance for new business. 

Invoice finance can help contractors be certain that they will be paid on time, every time. 

When it comes to recruitment agencies, time and money are of the essence. All payments need to be delivered on time so that employees can be paid and expenses can be covered. 

Invoice finance lenders can advance recruitment agencies the money they need to pay their contractors quickly and efficiently. 

This way recruitment agencies can stop worrying about cash flow gaps and focus on growing their business. 

Accounts payable financing is also commonly known as vendor financing or trade credit because you borrow money directly from the vendor. 

Vendors will provide buyers with credit so that they can purchase their goods and/or services. The buyer then uses the profits to pay the vendor back the loan plus an agreed interest rate. 

Just like invoice financing, you won’t typically be forced to put up any physical assets as collateral. The main difference between invoice financing and accounts payable financing is that the latter requires a credit check to see if you qualify for the loan. 

SMEs and start-ups typically have an unproven or lower credit rating, especially if they are still trying to establish themselves in their industry. Therefore, these companies may benefit more from invoice financing than accounts payable financing. 

At Sonovate, we ensure our clients know all they need to know about our financial services, including risks. Invoice financing comes with two main risks/unknowns: fees and the adoption of new technological solutions.

Here’s what you need to know about fees: We offer a flexible agreement, meaning you can use our services on a client-by-client, individual invoice basis without being locked into long-term agreements. If one of your clients fails to pay, this won’t affect the profit received from your other clients. On our intuitive platform, you’re shown exactly what you’re being charged with zero hidden fees — allowing you to understand your costs at a glance. 

And, on the adoption of new technologies: Many fear either the lack of ease or the software’s susceptibility to cyberattacks — or both. Our secure platform utilises the latest enterprise grade IT security protocols while also adopting the best in class technology to conduct credit checks, Anti-Money Laundering and KYC procedures for your clients, giving you the security you require. Additionally, with our intuitive platform, you can manage your invoices and associated invoice financing with ease.

When you partner with Sonovate, you gain tailored credit control solutions — enabling you to mitigate against cash flow gaps and in turn, manage seasonal fluctuations with confidence. 

Using our platform, you’re able to instantly withdraw your payments and receive the funds within just one or two business days. And, whether you use Xero, Quickbooks, Zoho Books or the likes, integration is made easy, and in turn, you’re able to gain holistic management and views of your cash flow. 

Closing the gap yielded by an unpaid invoice enables organisations to weather the ups and downs of the market and invest in growth opportunities — regardless of such fluctuations. Don’t let an outstanding invoice stop your business from moving forward; trust Sonovate as your invoice finance solution to bridge the gap between service and payment.