Businesses that have done the work and are waiting to be paid.
Invoice finance is used across a wide range of UK sectors, but it is not for everyone. This page sets out the situations it tends to suit, the sectors where it is well established, and the signs that it may not be the right answer.
Is invoice finance suitable for my business?
These are indicators, not rules. Providers make their own assessments and some specialise in situations others avoid. But they will give you a fair sense of where you stand.
Signs it may suit you
- You sell to other businesses or public sector bodies on credit terms
- Invoices are raised once goods are delivered or work is complete
- Your customers are established and generally pay, even if slowly
- Your sales ledger is reasonably well kept and reconciled
- Cash flow, rather than profitability, is the constraint on the business
- You expect to keep invoicing at a similar or growing level
Signs it may not be the answer
- Most of your sales are to consumers rather than businesses
- You invoice in advance, or in stages before work is complete
- A single customer represents nearly all of your turnover and is financially weak
- Invoices are frequently disputed or subject to retentions and contra-charges
- The need is really for long-term capital rather than working capital
If several of these apply, invoice finance may still be possible with a specialist provider, or another form of funding may be more appropriate. We will say which.
The situations we see most often
Customers pay on long terms
You invoice on 30, 60 or 90-day terms, and larger customers often stretch beyond that. The work is done long before the cash arrives.
Sales are growing faster than cash flow
More orders mean more stock, staff and supplier bills to fund upfront. Growth becomes a cash-flow problem rather than a celebration.
Seasonal peaks and troughs
Busy periods need working capital before the revenue from them is collected. Quiet periods still have fixed costs.
A few very large invoices
When a small number of customers account for most of your turnover, one slow payment can affect the whole business.
Payroll and recruitment commitments
Temporary staff, contractors and new hires need paying weekly or monthly, regardless of when clients settle their invoices.
An existing facility no longer fits
Your current invoice finance arrangement may have been right once, but fees, service or structure may no longer suit the business.
Where the business is in its journey matters
Growing businesses
Winning larger contracts and new customers usually means longer payment terms and higher upfront costs. Invoice finance can let the funding available grow in step with sales rather than lagging behind them.
Businesses under seasonal or contract-driven pressure
Peaks in activity need working capital before the revenue from them arrives. A facility linked to the ledger flexes with those peaks rather than being fixed at last year's level.
Businesses replacing an existing facility
If your current invoice finance arrangement has become expensive, restrictive or poorly serviced, we can review it against the wider market and help manage a switch if one is warranted.
Read our guide to switchingBusinesses new to invoice finance
If you have never used it before, the terminology can be off-putting. We explain it plainly, help you understand the commitment involved and tell you honestly whether it is worth pursuing.
Start with the basics
Where invoice finance is well established
Inclusion here does not mean every business in the sector qualifies, and being outside these sectors does not rule you out. Suitability is assessed business by business.
Recruitment & Staffing
Agencies placing temporary or contract workers carry a structural cash-flow gap: candidates are paid weekly, clients pay monthly at best. Invoice finance is widely used in the sector, and some providers offer facilities that include payroll and back-office support.
Typical pressure: Funding wages before client invoices are settled
Manufacturing
Manufacturers buy materials, run production and ship goods, then wait for payment. Larger customers may also dictate extended terms. Invoice finance can help bridge the gap between production spend and customer receipts.
Typical pressure: Working capital tied up between materials and payment
Transport & Logistics
Haulage and logistics operators face relentless operating costs against slower customer payment cycles. Invoice finance is a well-established source of working capital in the sector.
Typical pressure: Covering operating costs ahead of customer payment
Wholesale & Distribution
Wholesalers and distributors need to hold stock to serve customers, while those customers expect credit. Invoice finance can release cash from trade invoices to fund the next purchase.
Typical pressure: Funding stock while awaiting trade customer payment
Engineering & Fabrication
Engineering firms often work on larger, longer jobs for a concentrated group of customers. Invoice finance can support cash flow where work is invoiced on completion and paid on extended terms.
Typical pressure: Long job cycles and concentrated customer books
Business & Professional Services
Service businesses deliver first and invoice afterwards, often to larger clients with formal payment runs. Invoice finance can smooth the gap between delivery and receipt.
Typical pressure: Monthly costs ahead of client payment runs
Security & Facilities
Manned guarding, cleaning and facilities firms carry significant payroll costs against monthly contract invoicing. Invoice finance is frequently used to keep wages funded reliably.
Typical pressure: Regular payroll against monthly contract billing
Printing & Packaging
Print and packaging businesses fund paper, board, ink and machine time per job, then wait for settlement. Invoice finance can help match cash flow to production volumes.
Typical pressure: Per-job production costs ahead of payment
Construction-related Services
Parts of the construction supply chain, particularly subcontractors invoicing for completed work and suppliers of materials or labour, can use invoice finance. Applications for payment, retentions and stage payments make some construction invoices harder to fund, so specialist providers and careful structuring matter here.
Typical pressure: Complex payment terms, retentions and stage payments
Not sure where your business fits?
Tell us about your customers, your invoicing and where the pressure sits. We will give you an honest view of whether invoice finance is worth pursuing.
No obligation. We will tell you plainly if invoice finance does not look like the right answer.