![]() Invoice factoring (or account receivables financing).Invoice financing (or invoice discounting).Invoice finance in the UK falls into two broad sub-types: However, unlike those types of lending, with invoice financing, the borrower usually has no need to provide assets as collateral, nor are the owners or directors required to supply a personal guarantee. In simple terms, invoice financing functions in the same way as a revolving credit line or a series of short-term bank loans. ![]() Invoice financing can be used across your whole sales ledger, or you can choose the customers and the invoices you want to use for a loan (this is called selective receivables financing). In most cases, the customer will never know you used the invoice as security for a loan. Once the loan is repaid, and the lender deducts interest and fees, the balance is transferred to your bank account. The customer assumes they are paying you, not the lender. You retain control of your sales ledger and are still responsible for chasing your customers for payment.Ĭustomers post their payments into a trust account controlled by the invoice financing company, but with the appearance of an account controlled by you. The sum received may vary from 75% to 95% of the invoice value. ![]() Payment is usually made within 48 hours of submitting your invoice. With invoice finance, the lender utilises unpaid invoices as the security for funding, giving you fast access to part of the invoice’s value.
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