Dispelling the 5 common myths of Invoice Finance

With more and more businesses across the UK suffering late payments from customers, it’s essential to make sure your business is protected from outstanding invoices. With payment terms becoming longer and longer, bridging the gap in cash flow is becoming extremely important.
Products such as invoice Finance allow businesses to protect their business, and keep control of cash flow by using outstanding invoices as security against finance. Whilst there’s been a significant increase in the number of businesses taking out invoice finance, there are still some common myths that exist, stopping businesses from considering it.
In our most recent blog, we lift the lid on these common myths.

1.    They’ll hound my customers for payment

We understand that many businesses don’t want their customers to be made aware that they’ve “sold the debt on”. If you’d rather keep control of your sales ledger, there are providers in the market who allow this. Admittedly, some funders stipulate that they take control, however they aren’t going to hound your customers.

2.    My business isn’t in trouble – I don’t need it

Many businesses consider that only businesses who are failing, or heading into insolvency require funding, this simply isn’t the case. In our experience, we see just as many growing businesses using funding for their next project.
Invoice finance is a solution which businesses of all shapes and sizes use. It has gained increasing popularity due to its flexibility and it’s relative cost.

3.    It’s expensive

Everyone who has never used Invoice Finance has the perception that it’s expensive. This simply isn’t the case.
People think that because it grants them funds quickly, and is flexible then it must have a large price tag attached to it – the market has changed, and the increased competition has made it even better value than previously. In most cases, it’s been significantly cheaper than the existing arrangements (e.g. overdrafts/ credit cards) that businesses have used historically.

4.    I don’t want all of my invoices funding, so my business isn’t applicable

We understand that sometimes businesses don’t want to have to commit their entire sales ledger to invoice finance, which means we’re able to place you with particular funders who are able to “spot invoice finance”. This allows you to select which invoices are applicable, rather than all of your sales ledger. Many clients choose particularly significant transaction values, or customers who notoriously pay late.

5.    There’s a long tie-in contract to sign

As with many of the myths we’ve been dispelling – the common theme is flexibility. The market has changed, allowing the client more control – which is great news for businesses.
We’ve helped clients who’ve simply wanted the facility in place to fund one project, then never required it again. Others have simply stopped the facility, and then picked it back up months later for another project due to how impressed they’ve been with the product.
Whilst we’ve worked through the top 5 common myths, we’re hearing more each day – if you’re unsure whether invoice finance might be for you, we’re more than happy to advise you.

This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.