Running a small business is incredibly rewarding, but it can also be a constant juggling act, especially when it comes to cashflow. You’ve done the work, sent the invoice, and then… you wait. Sometimes 30 days. Sometimes 60. Sometimes even longer. Meanwhile, wages, suppliers, and everyday expenses still need to be paid.
This is where invoice financing can step in and make life a whole lot easier. Think of invoice financing as a cashflow booster. Instead of waiting for a customer to pay, a finance provider gives you most of the invoice value upfront – usually within a day or two. When your customer eventually pays, you receive the rest (minus an agreed fee). It’s your own money. You’re just getting it sooner.
Why small business owners use it
For many small businesses, cashflow issues don’t occur because they aren’t profitable, they happen because cash is tied up in unpaid invoices. This is where invoice financing can help you:
- Cover running costs without dipping into overdrafts or credit cards
- Pay suppliers on time, which keeps relationships healthy
- Take on new jobs without worrying about cash being stuck in limbo
- Reduce stress so you can focus on running the business, not chasing payments
Instead of waiting nervously for a big client to pay, you can move forward with confidence.
Is it complicated? Actually, no.
Most modern invoice finance providers keep things simple. You upload an invoice, they check it, and you get paid, often the same day. Some services even integrate with accounting software you might already be using, like Xero or QuickBooks.
You don’t need to finance every invoice, either. Many providers let you choose which ones you want to release cash from, giving you flexibility when you need it most.
So, what’s the catch? There’s no major catch, but there are fees and these vary depending on which provider you go with, they are usually based on:
- The value of the invoice
- How long the customer takes to pay
- The risk level of the transaction
The key is making sure the fee is worth the smoother cashflow, and for a lot of small businesses, it absolutely is.
Five tips when thinking about invoice finance
- Be clear about the reason for needing the facility: to resolve a short-term issue, to support a project, to pay creditors or crown quicker, to protect overseas sales, for growth.
- Be prepared, all lenders will need financial information: detailed accounts, management information, aged debtors and creditors etc
- Don’t leave it to the last minute, the quicker you need the facility the less providers can fulfil your needs and therefore costs generally increase.
- Don’t be disheartened if your bank says no. There are plenty of options out there for you.
- Use a broker, this will save you time and money.
Five tips for existing invoice finance users
- Check your contract and when it is due for renewal
- Before your renewals date (six weeks is ideal) organise a meeting or call with your provider to discuss the facility. Focus on what’s good but also what you think they could do better: rates, funding limits on individual debtors, concentration limits – any area within the facility which is causing you concern
- Ask them to reprice the facility before you enter into a new contract
- Test the market, there could be better deals out there
- If you are not happy then speak to us and we will find you a facility better suited to your business
Invoice financing isn’t borrowing money you don’t have, it’s about unlocking money you’ve already earned. For many small business owners, it’s a practical, stress reducing way to keep things moving, grow confidently, and stop cashflow from becoming a constant battle.
Find out more by visiting the Acorn Commercial Finance website or call on 0345 565 2603.
