Rob Hatfield, Business Development Manager at TBP – Trusted Business Partner, shares insights into how invoice finance can be a powerful tool for managing cash flow and supporting business growth. Drawing on over 20 years of experience, Rob explores how different types of invoice finance work, the scenarios they support, and how to choose the right funding partner in a crowded market.

Turnover is vanity, profit is sanity, cash is king!

In the current business climate this has never been more applicable.  Suppliers are wanting payments up front, customers are extending payment terms, overheads need covering and business owners, are in the middle, having to make the critical decisions and balance the books

Access to cash is essential and invoice finance offers a facility that allows business owners to tap into customer unpaid invoices to alleviate that pressure whether this be on a whole turnover or selective invoice basis.  However, invoice finance is not only used for this, interestingly, facilities have been provided for the following:

• General working capital.
• MBO, MBI & acquisition transactions.
• Funding growth.
• Assisting company financial restructures.
• Succession planning.

In fact, invoice finance is recognised as the fastest growing form of finance due its flexibility, security and facilities that can fund not just simple straight forward invoicing but also contractual debts including staged payments and applications for payment

Invoice finance traditionally takes two particular forms:

Full-Service Factoring

• The invoice finance facility is disclosed to the debtor i.e.  the invoice finance company is the payee on every invoice sent out.
• The invoice finance company undertakes sending out debtor statements, chasing debt and cash collections.
• Facility is real time.
• The invoice finance company essentially runs the sales ledger.

Confidential Invoice Discounting

• The invoice finance company is not disclosed to the debtor i.e. the business remains the payee on every invoice sent out.
• The business remains responsible for sending out debtor statements, chasing debt and cash collections.
• Facility requires a monthly reconciliation (therefore not real time) albeit, some providers now have an automated reconciliation system.
• The business remains in full control of the sales ledger.

However, the selection of a funder can be daunting and challenging.  There are a myriad of funders in the market, with a broad spectrum of structure, pricing and appetite.  Some you will know and some you will never have heard of but importantly, all have their place in the market.  

This is where Trusted Business Partner can really assist your business or a business in your network.  On provision of the relevant information from the business, we conduct all the required due diligence on the funders. We will identify the providers that will support the business, and we will hold the applicant’s hand throughout the application process from start to finish and then monitor to ensure the business is always receiving the best possible service and facility parameters.

With over 20 years’ experience in invoice finance, place your trust in us to provide the right guidance around invoice finance. Whether you are completely new to this type of facility or an experienced user testing the market for yourself or a business in your network we are here to support you.

Get in touch with the team today on 0191 406 4555 or email Rob directly on rob@tbp.co.uk to discuss potential funding options available to you.

Note: This article is for informational purposes only and does not constitute financial advice. Always consult with a qualified financial advisor before making financing decisions.