Invoice Finance Calculator

What is invoice finance?

Invoice financing is also known as accounts receivable financing. It allows businesses to access immediate cash flow by selling their outstanding invoices to a third-party financing company.

When a business sells its products or services to a customer, it issues an invoice with a payment due date. Instead of waiting for payment, businesses can sell their invoices to finance companies.

This means you can receive instant payment. You don't have to wait for the customer to pay the invoice. Instead, you receive consistent payment as soon as you raise the invoice.

How does invoice financing work?

In simple terms, you sell your invoices in order to release cash flow. The finance company pays you a percentage of the total invoice, and you get money in your account within 24 hours.

Typically an invoice company will pay you 70% - 90% of the total raised in the invoice. They will then own the invoice and be responsible for gaining payment in full from the customer.Invoice finance typically does not have interest rates. This is because it involves selling invoices instead of borrowing money. As a result, it is considered a fee-based financing option.

How much will they pay me?

Use our invoice finance calculator to calculate how much you can release from your unpaid invoices.

Benefits

• Improved Cash Flow: By selling outstanding invoices, businesses can access immediate cash.

• Faster Access to Funds: Quicker and more efficient than traditional bank loans.

• Flexibility: You can choose which invoices to finance. You can finance all your invoices or just some. Ideal for clients with long payment terms, or to take the hassle away from customers who don't pay on time.

• No Additional Debt: Unlike loans, there is no additional debt. This is because it involves selling existing assets (invoices) rather than borrowing money.

• Credit Risk Mitigation: Invoice finance companies often handle credit control and collections. This protects you by reducing the risk of bad debts and minimising the impact of non-payment.

• Keep it Confidential: You can keep your existing relationships with customers without disclosing the financing arrangement.

• Non-Recourse Options: Some providers assume the credit risk if the customer fails to pay, further protecting the business from potential losses.

Types of invoice finance

Factor invoicing

Factoring is when a business sells its unpaid invoices to another company, called a factor, as a form of invoice finance. The factor then advances a percentage of the invoice value to the business, typically around 80-90%. The factor collects payment from the customer and pays the business the remaining balance, minus a fee.

Invoice discounting

Invoice discounting is when a business keeps control of its sales ledger and collects payments from customers themselves. The business can borrow funds against its unpaid invoices, typically up to 90% of the invoice value. The business pays interest on the borrowed amount and repays the loan when the customer settles the invoice.

Selective invoice finance

Selective invoice finance allows businesses to choose specific invoices to finance, rather than financing their entire sales ledger. This type of invoice finance is suitable for businesses that have occasional cash flow gaps or need funds for specific projects.

Spot factoring

Spot factoring is a short-term invoice finance solution where businesses can sell individual invoices to a factor. It is ideal for businesses that have occasional cash flow issues or need immediate funds for a specific purpose. Spot factoring provides quick access to cash without the need for long-term commitments.

Construction finance

Construction finance is a specialised form of invoice finance designed specifically for the construction industry. It helps construction companies overcome cash flow challenges by providing funds against certified applications for payment or stage payments.

Supply chain finance

Supply chain finance, also known as reverse factoring, is a collaborative solution that involves multiple parties. It allows businesses to extend their payment terms to suppliers while ensuring suppliers receive early payment.

Not sure which type is right for you?

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Check if you're eligible for invoice finance

Eligibility for invoice finance typically depends on your business.

Firstly, businesses must have a consistent turnover and a minimum monthly invoice value to qualify.

Additionally, businesses must have a solid customer base with creditworthy clients. Providers assess the credit rating of the business's customers to determine the risk involved in financing their invoices. This is because invoice finance relies on the ability of the customers to pay their outstanding invoices.

To check whether your business is eligible, speak to our team for advice. Call 020 7458 4586 to talk to one of our advisors, who will be happy to help.

Apply for invoice finance

Our intelligent matching service will match you with an invoice financing lender instantly. Plus, our dedicated team are on hand to give unparalleled support and advice throughout the process.