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Invoice Finance Checklist

Invoice Finance allows businesses to tap into the value of unpaid invoices by using them as security against lending.

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This checklist can help you avoid common mistakes and help you decide whether Invoice Finance is suitable for your business, before you get going.

PLEASE NOTE

This checklist is not part of an application process for Angel Investment. However, we hope it gives you an idea of what is involved and what you need to do to prepare. Angels may ask for more or less information about your business and the finance you need than what is set out below. This will change depending on individuals involved.

STAGE 1: Understanding Invoice Finance

  • Do you know what Invoice Finance is?
    Are you aware of how Invoice Finance works? Do you know the difference between Factoring and Invoice Discounting and which is more appropriate for your business?

  • Is Invoice Finance suitable for your business?
    Does your business receive invoices? Does Invoice Finance suit your business’ ambitions?

  • Do you know how much money you need and why you need it?
    Will you get an Invoice Finance facility to match your needs? Do you know how you will use the finance you’re provided?

STAGE 2: Are you eligible for Invoice Finance?

  • Do you have invoices?
    What is the value of your unpaid invoices? This will impact the amount of money you are eligible for.

  • How much are you looking for?
    Does the amount of finance you need match what Invoice Finance providers generally lend?

  • Are you an established business?
    Do you have a trading history that proves you receive payment for invoices you’ve issued?

  • Are your accounts detailed and accurate?
    Do your financial statements show you have a good record of getting paid? How long is your typical payment cycle?

STAGE 3: Preparing your business for Invoice Finance

  • Are your accounts in order?
    Invoice Finance providers will review and analyse your financial statements and your business’ credit report. Are you confident your accounts are suitable? Do you know what your credit report will say?

  • How will you use the finance?
    Do you know how you will use the finance if your application is successful? Have you forecasted the impact of the finance coming into your business?

STAGE 4: Understand the deal

  • How much will Invoice Finance cost you?
    Do you know how much the facility will cost you? What are the margins and fees involved?

  • Who manages the sales ledger and collects payments?
    Depending on the form of Invoice Finance you go for, either you or the Invoice Finance provider will manage your sales ledger. Do you know who is responsible for collecting payment for your invoices?

  • How long is the agreement?
    What will you do when the facility comes to an end?

What's your next step?

Disclaimer: We make reasonable efforts to keep the content of this article up to date, but we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. This article is intended for general information purposes only and does not constitute advice of any kind, including legal, financial, tax or other professional advice. You should always seek professional or specialist advice or support before doing anything on the basis of the content of this article. 

Neither British Business Bank plc nor any of its subsidiaries are liable for any loss or damage (foreseeable or not) that may come from relying on this article, whether as result of our negligence, breach of contract or otherwise. “Loss” includes (but is not limited to) any direct, indirect or consequential loss, loss of income, revenue, benefits, profits, opportunity, anticipated savings, data. We do not exclude liability for any liability which cannot be excluded or limited under English law.

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