New ways for credit managers to make the cash flow! – A look at a few companies which provide smarter ways to make finance work whilst mitigating risk – and how best to find them! “Klarna” for business if you like. For many start-ups and SMEs, the more traditional options for credit are not immediately or easily available; in such cases, businesses have to find smarter ways to finance their work, all while mitigating risk. Invoice finance is one such way that credit managers can get you quick access to funding, based on the lenders’ risk criteria.
There are two main types of invoice finance:
Factoring
This allows businesses to generate money against unpaid invoices, with the possibility of borrowing up to 90% of the value of your invoices. Factoring also manages your sales ledger for you and collects payment for your invoices directly from your customers. You will then receive the remaining balance once the costs of the factoring service have been deducted.
Invoice discounting
This is similar to factoring, but you pay a fee and discount charge when you use the funding (similar to interest) like you would on a standard overdraft or credit card. With invoice discounting, you also keep control of your customer payments, rather than having them handled by the lender.
There are benefits and risks associated with invoice finance; the benefits being – quick access to finance, the ability to capitalise on an unused asset on your balance sheet, not having to give away any equity to investors, and you can improve your cashflow; The risks are – credits checks will be conducted for each application, (and these checks could end up having an impact on your credit report), you are depending on your customers paying on time to enable you to repay on time, there are inevitably fees payable so a cost associated with the lending.
There are many Invoice Finance companies operating in the UK market, so here is an overview of a few of them:
Barclays and Santander have significant stakes each in Kriya meaning it is a very well-funded platform, indeed they are Europe’s largest and have funded over £20 billion worth of invoices since 2011. The UK Government partnered with Kriya in 2013, via the British Business Bank and this partnership has seen more than £50 million funded to small businesses to date. Kriya only offers invoice discounting, meaning your credit manager retains responsibility for credit control. They allow you to receive up to 90% of your invoice value within 24 hours, and then the remainder when the invoice is due.
eCapital has grown to become one of the UK’s leading, privately-owned, factoring companies. They were formally called Advantedge and have bases in both the Thames Valley and Manchester. Between their directors is over 120 years’ worth of business funding experience, with $4 billion now funded in the UK. Their online tool provides real-time information and enables immediate access to funding. eCapital offers confidential invoice discounting, Credit Protection to protect your business against bad debt and non-payment of invoices, funding lines up to £2.5 million, and ‘use only as and when you need finance’.
Close Brothers Invoice Finance have been voted ‘Best Factoring and Invoice Discounting Provider’ by Business Moneyfacts for the third year in a row. The Close Brothers Group plc is a FTSE 250 modern merchant banking group, and one of the highest-rated banks in the UK according to Moody’s bank ratings. Close offers you the best of both worlds by providing the flexibility of an independent provider, alongside the strength of a merchant bank at their foundation. Close local teams can make quick decisions due to their direct access to underwriters, and they are accessible in that they will consider your business objectives and future potential – not just your industry and turnover. They quote their market-leading technology, IDealTM as another reason why they stand out from the crowd; this technology integrates with a business’s accountancy software, automatically reconciling invoice payments, ultimately saving time and money on the manual reconciliation front.
This independent finance company is privately funded and owner-managed, meaning they can make underwriting decisions in-house. They were founded in 2010 and are based in Cheshire but offer national coverage. Their owners are still involved in the day-to-day running of the business, maintaining a personal connection with clients and brokers. They were one of the first specialist Selective Invoice Finance companies in the UK – selective invoice finance is a product that allows clients to choose which invoices they want to sell, as and when they need to – rather than funding an entire sales ledger (as with factoring and invoice discounting). Typical clients of Creative are owner-managed businesses that are growing and need a little help getting up to the next step. Creative can finance either a single invoice to a single debtor or a batch of several invoices to several debtors. Backing this all up is the offer of Bad Debt Protection too. These are only a handful of the many Invoice Finance companies out there, and some credit managers may wonder where to start or what to type into the search engine to find the best fit for their business. This is where
Funding Options come in:
Funding Options
At the end of 2022, Tide, the leading digital banking platform acquired Funding Options, a leading UK marketplace for business finance. Founded in 2011, Funding Options is a leader in the SME credit intermediation, has been recognised as a fast-growth scale-up, and has featured in the FT1000, (the Financial Times’ annual list of Europe’s fastest-growing companies).
The government-owned British Business Bank has chosen Funding Options as a designated platform to find finance for businesses. They promise to break down funding barriers with a simple and empowering process, and Funding Cloud is their technology which accurately validates your business profile and matches you to the industry’s largest lender network. Funding results are therefore able to be uniquely tailored to each and every business.
As well as Invoice Finance which we’ve looked at today, Funding Options also offer traditional Business Loans, Asset Finance, Property Finance, Commercial Mortgages, Working Capital, and Business Cards.
Their process follows three simple steps:
- Tell them how much you need to borrow, and what it’s for and provide some basic information about your business.
- You can get an instant comparison thanks to their smart technology which will compare 120+ lenders and match you with the right finance option to match your needs.
- Funding Options then help guide you through the application process to the point when you receive the funds.
Using Funding Options is a simple and safe way to ensure your business can access funds to finance your work, all while being assured that you are mitigating risk. Your size and stage in the business journey do not need to be a barrier to accessing the credit you need to grow and move on to the next stage. There are so many options out there, and thanks to organisations like Funding Options, you can make sense of what’s relevant to you and your business needs.
When seeking to grow your business, partnering with Core3 is a smart move, enabling you to find the best finance professionals who will help you make the best decisions. get in touch today to have a chat about your specific requirements.
Read more of our stories today at: www.core3.co.uk/finance-recruitment-company/
