For Businesses
Technology
Free up your cashflow - release funds tied in unpaid invoices
Estimated time to read page: 4min 15s | Written - January 2025. Reviewed quarterly.
"Invoice finance transforms unpaid invoices into working capital, giving businesses a flexible and often cost-effective funding solution. While it’s sometimes misunderstood, modern invoice finance can adapt to diverse needs, helping businesses improve cash flow without waiting for client payments." - Jamie Davies, Head of Lending
Invoice finance, also known as debtor finance or factoring, is a financial solution that allows businesses that raise invoices on credit terms to access cash tied up in unpaid invoices. The facility provides an upfront advance up to 95% of the invoice amount.
The remaining balance, discounted of any fees, is paid once the end customer fulfils their payment.
The amount of credit accessible through this facility depends on the industry and debtor's financial strength.
Let us find the ideal invoice finance provider to best suit your requirements. We can make sure the facility will be tailored to meet your business' needs
The industries that typically apply for asset finance are:
Invoice Finance helps businesses maintain steady cash flow, meet operational expenses, pay suppliers, invest in growth opportunities, purchase more stock, invest in new equipment, and more. It's especially useful for businesses dealing with long payment terms or late-paying clients.
Business that deal with suppliers and debtors, Invoice Finance can help release the cash to pay suppliers upfront and get bulk discounts.
The types of facilities are:
Confidential Invoice Discounting (CID): A form of financing where a business borrows against its outstanding invoices, with the process remaining confidential from customers, who still deal directly with the business for payments.
Invoice Discounting: A financing option where a business borrows money against its unpaid invoices, with customers aware of the lender’s involvement in the process.
Client Handles Own Credit Control Services (CHOCCs): A facility where a business retains control over its credit management and collections, while still receiving funding based on its invoices.
Spot Factoring: A short-term finance option where a business sells specific invoices to a factoring company for immediate cash, often used for one-off situations.
Selective Invoice Finance: A flexible form of financing where a business can choose which invoices to finance, offering more control and the ability to select the invoices that best meet their needs.
The specific eligibility criteria will vary by lender, as a rule of thumb, most lenders require
Usually a consistent track record of invoicing is required
The debtors require good credit history, as the size of facility is based on client's profiles.
Business issuing invoices to other businesses
Some lenders may require a minimum monthly invoicing volume. Startups are eligible for Invoice Finance.
Service fee: usually a percentage of the invoice value or a fixed monthly amount, this covers the cost of the administration for the service the lending partner provides - running the facility, collecting and processing payments.
Discount fee: equivalent to the typical interest fee you would begiven on a loan, this covers the cost for the facility itself, and is typically between 1-5%.
Arrangement fee: varies from lender to lender and will depend on a few factors, such as facility size and nature of the product. This covers the cost of tailoring and building your facility.
By joining years of expertise with our in-house intelligent lending technology, we are able to quickly match your business to the best product and the right lender for your circumstances, even if you have struggled in the past, in a simple and straightforward way.
On top of that, we provide advice and support through the entire process. Arranging a finance facility can take time. We assist you in cutting through the unnecessary and focusing only on what needs to be done.
At Spark, we streamline the process of securing Invoice Finance by combining years of expertise with cutting-edge lending technology. We identify the best product and lender tailored to your needs, even if you've faced challenges in the past. Unlike tied brokers, we prioritise your success and guide you through the entire process to secure the right solution with minimal hassle.
You can receive up to 95% percent of the value of the invoice upfront. Typically, facilities are set around 80-90% of the invoice value upfront. It will depend on the provider, type of product behind the invoice, and business profile.
Many lenders can release the funds within 24-48 hours from the invoice. The timeframe will rely on how quickly the invoice is approved - as they run checks to validate each one.
Arranging a facility typically takes 1-3 weeks, depending on the provider and the business invoicing structure complexity, as the process involves initial consultation, document submission, and credit checks. Some lenders provide faster approvals for straightforward cases.
This will depend on the type of IF facility set. For reference, Invoice Discounting is confidential, while Invoice Factoring involves the provider contacting the clients to confirm invoices / chase payments.
This will rely on the agreement set with the provider. Some are flexible, while others may have a minimum term. When a term is set, there is usually the possibility to leave with notice in advance. It is common for business to change to another provider, rather than leave an IF facility completely, which is supported both by Spark and new provider.
