Invoice Finance - FAQs

What is invoice finance?

Invoice finance is a form of short-term borrowing that allows you to borrow money against sales invoices before they’ve actually been paid.

The way this works is quite simple. You sell your outstanding invoices to Aldermore, and we pay you up to 90% of the full invoice value, up front. Once we have received full payment for the invoice, we’ll then return the remaining 10% to you, minus a small fee.

How do I know which Invoice Finance facility is right for me?

While Invoice Discounting and Invoice Factoring both allow you to unlock the cash tied up in unpaid invoices, there is a key difference between the two.

With discounting, you remain responsible for collecting the outstanding invoice debt, which means you need to manage collection of your outstanding invoices from your customers directly.  As a result discounting can be provided confidentially, so that your customers are unaware that you’re using invoice finance.  

With Factoring, you’ll benefit from a full credit control service. This has the added benefit of allowing you to concentrate on growing your business without the added worry of chasing customers for payment.  Given that we would be collecting the payments directly from your customers, factoring facilities are predominantly provided on a disclosed basis.

Asset Based Lending additionally offers you fast access to release working capital tied up in your assets. This may be suitable for larger businesses that are looking for a higher level of funding or for businesses looking to expand and need to relieve their cash flow pressures.  

If you’re unsure about which invoice finance facility is the right one for you, please contact us and we can discuss what would be most suitable for your business.

How do I know if I am eligible for an Invoice Finance facility with you?

We understand that cash flow can be one of the biggest challenges for SMEs and we want to be able to support a range of businesses and industries. 

If you are a business that provides a service or product on credit and raises invoices, you may be eligible for Invoice Finance.  As a general rule we do require businesses applying for invoice finance to have a minimum turnover of £250,000. Contact us directly to discuss your individual business needs.

What is Asset Based Lending?

Asset Based Lending is an invoice finance facility that additionally provides you with funding against the value of the multiple assets such as plant and machinery, inventory, property and debtors within your business.   The cash tied up in these assets is released to provide you with additional working capital.  

If I start using Invoice Finance, will this affect the relationship I have with my customers?

With Invoice Discounting you maintain all direct communication with your customers and collection of your sales ledger. We can offer a confidential invoice discounting facility so your customers needn’t even know that you use Invoice Finance.

With Factoring we would collect payment on your behalf from your customers; our experienced and professional credit control team will manage this so that the direct relationship you have with your customers is not impacted.

Is Invoice Finance essentially a loan?

Invoice Finance is a dynamic form of finance, but not one all businesses may immediately think of. We can provide you with up to 90% of the invoice value straight away, making it an excellent solution for businesses that struggle to keep a healthy cash flow due to inconsistencies in payment cycles.  It also grows with your turnover meaning it can provide more flexibility than a traditional loan. 

How much does an Invoice Finance facility cost?

The cost will be dependent on your requirements from the facility and the size of your business.  Once we have understood your business needs we will put a clear proposal together that will outline the facility we can offer along with the fees.  The main charges within Invoice finance are a service fee which is a percentage of the invoice value and a discount fee which is calculated on the balance we advance to you.

What support will I receive once I’m set up with you?

Once you’re set up, a dedicated Relationship Manager will be assigned to you and your business who will support you as little or as much as you need. We will do an annual review of your facility to ensure that it is working for you and meeting your business objectives.  

You will also be provided access to our E3 portal, your online invoice finance account, where you can manage, review and check your funding availability at any time.