Invoice finance provides businesses with early access to cash from their unpaid invoices. There are two main types: factoring involves the invoice financier collecting payment from customers, while invoice discounting requires the business to pursue customers for payment. While invoice finance can provide cash flow benefits, businesses should understand all associated costs and terms to avoid surprises. Compare Funding can help businesses find the most suitable invoice financing option.

1. Confused
about
Invoice Finance?

2. Invoice Finance
for beginners
What is Invoice Finance?
Types of Invoice Finance
available
Myths
Pros and cons

3. www.comparefunding.com/invoice-finance
Introduction
Managing cash flow is essential to the success of
a business. . .
. . . especially one that sells on trade credit terms.
Invoice Finance
for beginners

4. www.comparefunding.com/invoice-finance
Introduction
If you find yourself waiting a long time for payment,
this puts pressure on your cash flow.
Plus, chasing for payment can waste valuable time
and resources.
Invoice Finance
for beginners

5. www.comparefunding.com/invoice-finance
Introduction
Using Invoice Finance is one way to help you
manage your cash flow.
It can also save you time chasing for payment.
Invoice Finance
for beginners

6. www.comparefunding.com/invoice-finance
What is Invoice Finance?
Invoice Finance is like a cash advance on your
unpaid sales invoices.
You get an advance as soon as you raise an
invoice, even if it takes your customer much longer
to actually pay.
Once they pay you get the rest of the money,
minus the fee for the advance.
Invoice Finance
for beginners

7. www.comparefunding.com/invoice-finance
What is Invoice Finance?
It’s not the same as a loan – you’re simply getting
access to the cash you’ll be paid early on .
Invoice Finance
for beginners

8. www.comparefunding.com/invoice-finance
Company
ABC
1
ABC completes goods or
2
services, raises a sales ABC also sends the
invoice and sends it to invoice to Invoice
XYZ. 123 advances a Financier 123
We’ll say it’s for £1000 % of the invoice
for this example to ABC. For
example £800 3
123 now
transfers the
Customer balance minus Invoice
XYZ fees. (£200 - Financier
£10 = £190) 5 123
4
XYZ pays the whole
invoice value.
Invoice Finance
for beginners

9. www.comparefunding.com/invoice-finance
Types of Invoice Finance
There are lots of variations of Invoice Finance but
they can mainly be classified into two main types:
Factoring
Invoice Discounting
The biggest difference between these two types of
Invoice Finance is whose job it is to chase
customers for payment.
Invoice Finance
for beginners

10. www.comparefunding.com/invoice-finance
Invoice Discounting
‘Invoice Discounting’ is the basic cash advance
service. All the work of making sure your
customers pay their invoice still falls to you.
Factoring
‘Factoring’ is the cash advance service plus credit
control. The Invoice Financier takes on the task of
chasing each invoice and collecting payment.
Invoice Finance
for beginners

11. Invoice Finance Myths

12. www.comparefunding.com/invoice-finance
Myth 1
Businesses who use Invoice Finance aren’t doing
very well, so it’s a sign of distress.
Times have changed! High street banks are now
actually encouraging their customers to change
the way the way they manage their money and are
supporting the move from overdrafts to invoice
finance facilities. It’s actually great for growth firms,
as it grows with your business helping you handle
bigger projects and bigger clients.
Invoice Finance
for beginners

13. www.comparefunding.com/invoice-finance
Myth 2
Using Invoice Finance will be harmful for customer
relationships.
Not true! If you are worried about keeping the
personal touch with customer relationships, you
can keep control of the collections process. And if
you do opt for Factoring then having a professional
and experienced credit control team can be a
positive, not a negative.
Invoice Finance
for beginners

14. www.comparefunding.com/invoice-finance
Myth 3
All Invoice Finance companies are the same.
Just like any other market, there is a big variation
across companies, and there are many different
views and risk appetites.
Compare Funding will search the market to find
the most suitable company for you.
Invoice Finance
for beginners

15. www.comparefunding.com/invoice-finance
Pros and cons
Flexible – generally grows with Invoice Finance won’t help if a
the business in line with business does not have a
turnover sustainable business model
Good for growing companies i.e. profits being made
Releases cash tied up in the True costs can be difficult to
asset of the business predict as charges are based
Factoring can help if you on turnover and the amount of
struggle or don’t have time to cash utilised by a company
collect outstanding monies Some finance companies have
Overpayments can be lengthy notice periods and
requested at relatively short terms so you need to read the
notice to assist with fine print.
unforeseen cash flow
problems.
Invoice Finance
for beginners

16. Use Compare Funding
to get an Invoice Finance
quote today
www.comparefunding.com/invoice-finance