Invoice & Trade Finance

Overdrafts and loans tend to be for fixed amounts which may not suit a growing business with increasing financial needs, whereas Invoice finance grows with sales effectively turning sales made on credit into instant cash.

So why doesn’t everyone use invoice finance?

Just like other funding solutions for business, invoice finance doesn’t suit all types of business. It only applies to a business selling to other businesses, not to private individuals as it requires an order to have been completed and delivered prior to invoicing.  Often, there is a requirement for the business to have a spread of reasonable quality customers as well, but in an increasingly competitive market, a variety of invoice finance companies will take different views on this.

Factoring versus Invoice Discounting

There are two principal types of invoice finance, both typically provide funding up to 90% of the gross value of your outstanding sales ledger and ongoing on each invoice as these are raised, with an invoice financed for 90 days. Where they differ is in the additional service offered.

A Factoring facility will also include professional credit control in the form of telephone calls, chasing letters and monthly statements. This can be of real benefit to the smaller business who can struggle to fit in credit control into their already busy day and frequently have weeks go by without chasing. Like all service based products your experience of the level of service provided can vary widely with the company chosen

Invoice Discounting on the other hand provides only the funding element and leaves you to continue with your credit control, providing you can keep on top of it to the satisfaction of the funder.

Both these services can be on a confidential or disclosed basis (where you customers receive calls from the funder and statements etc all of which clearly show their involvement) and may also include credit insurance.

Cost

Most of the providers we work with offer a bespoke service so pricing is unique to each business, but typically there are two key fees.

A discount charge which is expressed as a percentage above base rate (like an overdraft), the range here might be from 1% to 5% above base rate and a

Service Fee or Administration Fee which is a fixed percentage of the gross value of each invoice financed- This will be for a lower sum if invoice discounting as you are not paying for the credit control facility.

How it works

  • Contact Us – Let us know what type of funding you need, and we’ll give you some options
  • Approval – If you would like to accept, we will process the application and produce the paperwork
  • Complete – We’ll manage the transaction through to completion
Ready? Contact Us

Our team are ready to help you get advice about Invoice & Trade Finance

We offer a straight forward way to raise funding your business. Ortus offers an easy to understand process, with straight forward documentation. Our goal is to be as transparent and efficient as possible, so we will not use any jargon or try to confuse you throughout your application. If you would like more information about this process and the options available to you, please email or call our experienced asset finance advisors on 0800 008 6938.