What invoice finance actually is
If you have not come across it before, the idea is simpler than the name suggests.
A business does the work, raises an invoice, and then waits. Thirty days, sixty, sometimes ninety. The work is finished and the money has been earned, but it is not in the bank. Meanwhile the wages, materials and suppliers behind that job have already been paid for.
Invoice finance closes that gap. Rather than waiting for your customer, you draw most of the value of the invoice now, and the facility settles itself when your customer eventually pays.
That distinction matters more than it might appear. A loan gives you money you have not earned yet, and you repay it out of money you have not earned yet either. Invoice finance works the other way about, which is why it clears itself rather than becoming another monthly commitment.
Selective, factoring or discounting?
Three terms come up when people start looking, and they are not the same thing. The difference is mostly about how much of your business you have to hand over.
| Type | What it involves |
|---|---|
| Selective invoice finance | You choose which invoices to fund, one or several, and leave the rest alone. No obligation to commit your whole sales ledger, and nothing to pay when you are not using it. This is what we do. |
| Invoice factoring | The whole sales ledger is committed, and the funder usually takes over collecting payment from your customers. Simple to run, but you hand over the customer relationship. |
| Invoice discounting | Also usually the whole ledger, but you keep control of collections. Normally reserved for larger businesses with established credit control. |
If you have one large invoice causing a problem and the rest of the ledger is fine, committing everything to a funder is a great deal more than the situation needs. That is the case selective invoice finance is built for.
Who it tends to suit
- Businesses invoicing other businesses on thirty, sixty or ninety day terms
- Paying wages, subcontractors or suppliers before your own customers pay you
- Taking on a contract larger than your current cash comfortably supports
- Seasonal or uneven trade, where costs and receipts fall in the wrong order
- Growing faster than the balance sheet makes you look
- Wanting to fund one invoice rather than commit the whole ledger
What you get with us
- Up to 80% of an approved invoice's value released immediately
- Facilities from £25,000 to £250,000
- Approval based mainly on your customer's creditworthiness, not your own
- No long-term contract and no obligation to commit your sales ledger
- No set-up costs, arrangement fees, early repayment penalties or termination fees
- A dedicated account manager who knows your business
Where it is the wrong answer
It does not suit every business, and it is better to know that before you spend time on an application.
If you sell to consumers rather than to other businesses, there are no commercial invoices to fund. If your sales are made up of a great many small invoices, the administration tends to outweigh the benefit. If the customer behind the invoice is in poor financial health, approval becomes difficult, because their creditworthiness is what the funding rests on. Some contracts prohibit the assignment of invoices altogether. And if the shortfall is structural rather than a matter of timing, no form of finance will fix it, and we will tell you so rather than fund it.
Common questions
Is it a loan?
No. It releases money you have already earned on work already delivered, and it clears when your customer pays. There is no repayment schedule running alongside the problem that prompted it.
Do I have to fund all my invoices?
No. That is what selective means. You choose which invoices to draw against and leave the rest of your ledger alone.
Will my customers know?
That depends on which arrangement suits your situation, and it is decided case by case. On a confidential facility we do not contact your customer at all, not even to verify the invoice, which we do from your own paperwork instead. Your relationship with them is unchanged, and there is no extra cost for it. On a disclosed facility your customer is told the invoice has been assigned. We will tell you which we are proposing before anything is set up, rather than after.
How quickly can I get the money?
Funds are released immediately once an invoice is approved, sent by same-day payment at no extra cost.
How much can I draw?
Up to 80% of the value of an approved invoice. The remaining 20% is not ours: it is returned to you when your customer settles, less our fees. Facilities run from £25,000 to £250,000.
What is approval based on?
Principally on the creditworthiness of the customer who owes the money, rather than on your own credit history. That is often why it works for businesses growing faster than their balance sheet suggests.
What if I do not use it?
There is nothing to pay. No long-term contract, no monthly minimum, and no termination fee if you stop.
Not sure whether it fits?
Tell us your payment terms and we will give you an honest answer, including if the answer is no.
Selective Invoice Finance
Our selective invoice finance service allows you to choose which of your unpaid invoices you would like to draw against, as early the day they are raised!
Ensure wages and critical payments to suppliers and other creditors, can be made on time.
At Select we aim to help take the strain out of your cashflow and the stress out of running your business.
We’re here to help your business
Select’s facilities aim to alleviate the stress of managing your cashflow, you will not be tied into a long-term contract, you’ll only pay for the funds you use and there are no hidden charges whatsoever. Speed and efficiency come together to help your businesses flourish.
We put you at the heart of everything we do
We ensure that everything we do is underpinned by our values. We guarantee to always be transparent with our process; no frills, no surprises, you will only pay for the funds you draw down, not the ones you don’t. You’ll be dealing directly with our professionals, devoted to not only finding solutions for your business but also in creating a partnership. We value a close relationship with our clients because we know the key to building that partnership is trust. Trust that we can deliver the best options for your individual needs.
Working across all industries.
We will look at businesses from all sectors with a can-do approach!
We will look at businesses from all sectors with a can-do approach!
Wholesale
Manufacturing
Haulage
Our responsive and supportive approach enables us to support you and help your business reach its full potential. Get in touch with our team today to experience it for yourself!