compare invoice financing

With the new 31st January deadline fast approaching for UK businesses to get their Coronavirus Business Interruption Loan Scheme (CBILS) applications in, Ignite Business Group explores the potential impact on access to finance for businesses and what options may be available when looking to compare invoice financing.

As well as Bounce Back Loans, CBILS has provided a lifeline to tens of thousands of businesses in the UK, easing access to funding. Many businesses have taken advantage of the scheme to get badly needed cash into their business accounts whilst enjoying interest-free money (for the initial 12 months). In addition, others have been able to temporarily reduce their reliance on other working capital facilities such as invoice finance or overdraft facilities.

But with the end of CBILS fast approaching, where will you be able to turn for your funding once final applications have been accepted?


Initial Impact of CBILS on the Invoice Finance market

With many businesses taking advantage of the opportunity to take interest-free money (for the initial 12 months) courtesy of the UK Government, they have been able to temporarily reduce their reliance on other working capital facilities such as invoice finance.

CBILS has proved an excellent way for businesses to access cash quickly to support their businesses through the pandemic and for many businesses the scheme has been a lifeline. This has also limited new users of invoice finance facilities who have (in the main) found access to CBILS cash an easy short-term fix.


Access to funding for businesses post-CBILS

If the Coronavirus pandemic has highlighted one thing in the business world, it is the importance of access to liquidity. With the end of CBILS looming, there are concerns that the availability of credit for businesses could dry up, with funders no longer having the safety blanket of a government guarantee to provide them with the confidence to lend.

This issue could be further compounded by the impact on financial performance for businesses and the significant levels of additional short-term debt so many businesses have taken on in the form of Bounce Back Loans and CBILS. In addition, the furlough scheme simply cannot last forever. The result is that the ability of many businesses to take on additional short-term loans to bolster their working capital is likely to be limited which will leave them needing to explore other ways to raise finance.

So where will you turn when if you want to compare invoice finance? The good news is that there are still likely to be options available, but this will, in many cases, rely upon turning to assets of the business. Commercial property, stock, plant, machinery, and vehicles will all be good places to start, however, these solutions may not be for everybody and could still be tricky to secure, particularly if your profits have been badly hit by the pandemic.


Invoice Finance to the rescue?

If your business provides goods/services to other businesses and does so on credit, invoice finance is an option that should not be ignored and could well prove vital to you in the coming years.


Unlike a term loan, invoice finance facilities have no fixed monthly capital repayments and are secured directly against the money owed to the business by its debtors. The funding is based directly on the invoices you raise, i.e. allowing you to advance against money owed to your business in the future. This means that the availability constantly replenishes as new invoices are raised and old ones are repaid and so this is a much more flexible option for businesses to explore.

Whilst CBILS has been a critical way of getting money moving around the economy; ultimately repayments will kick in a year after funds are drawn, and so this may well prove to be only part of the solution. Most CBILS loans will be repaid over less than 6 years, providing significant repayments for businesses to service from potentially reduced levels of profit.

This will no doubt result in more and more businesses having to compare invoice financing to raise cash to move forward and grow.


Should you consider looking at Invoice Finance Companies?

So, as a business owner, should you look at Invoice Finance as a solution for your business?  We think so.

There are several ways in which an invoice finance facility could help your business, and the answer will very much depend on your individual business. For some, it may be a case of using invoice finance to repay a CBILS or Bounce Back loan ahead of the repayments starting; either to avoid a high-interest rate after the initial 12-month interest-free period or to avoid a high fixed monthly repayment. For others, it may be a case of needing to raise additional finance and with up to 95% of your debtor book up for grabs, this could be a game-changer.

Having access to additional funds may well boost your confidence it a difficult economy, to push on and grow your business and there are some great deals available right now, with invoice financiers having taken a hit with many opting to use CBILS and Bounce Back instead of their invoice finance facilities. So now could be the perfect time to consider this option.

Many invoice finance facilities will also offer the opportunity to insure your debtor book, giving you control and security in uncertain times. Therefore, as well as raising additional finance without fixed capital monthly repayments, you could actually better manage your risk and protect your business against the threat of bad debts.


Want to compare Invoice Financing for your industry sector?

If you would like to find out more about Invoice Finance and the flexible deals on offer for your industry sector, call us on 01332 896 020 or email us at to see how we can help your business’ cashflow.



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