How does invoice financing work?

We are often asked how does invoice financing work.

Invoice financing is a form of financing which is increasingly popular in the United Kingdom. In a nutshell, invoice financing works by the business who requires financing entering into an invoice finance agreement with a bank or finance company pursuant to which, all of the business’ invoices both present and future are assigned to the finance company. The finance company then owns those invoices but the benefit to the company assigning those invoices is that it gets an immediate agreed repayment against those invoices of anything up to 90% of the invoice value.

Used correctly, the proper use of an invoice finance facility provides enormous cashflow benefits to any business and can help its ability to grow.

There are many different types of invoice financing on the marketplace and it is important to understand the differences between

• factoring;
• confidential factoring;
• invoice discounting;
• maturity factoring;
• undisclosed factoring

to name but a few.

At Francis Wilks & Jones we have a genuine team of experts who have many decades of experience between them in this marketplace. Our invoice finance team are familiar with all types of invoice finance products, the way in which the agreements work, are drafted and any other issues which arise pursuant to the running of an invoice finance facility.