• Business Finance For Startups

    I thought I would conduct a small piece of research to find out how easy is it for a new startup to find its way to business finance brokers such as ourselves, that can help with invoice finance products.

    I used the situation of a company that is highly suited to using some form of cash flow funding - although they may not know the name of the product that they are looking for. The result was that it was very difficult to see how they would naturally find their way to such services through a simple Google search for a generic term. The search term I used was "business finance".

    Finance For New Startups

    New startups that are looking for business finance are one of our target market segments, although often they don't really know the type of product that they are looking for, they just know that they need some additional cash injected into their company for working capital purposes. We have plenty of funders that can help start-ups, even if they don't have previous trading history, they don't have assets for security or they have previous poor credit history. Companies in this segment are unlikely to be able to qualify for traditional forms of finance, such as loans, very easily so an invoice finance solution is likely to be an easy option, with a number of providers seeking to help new start up companies. The other benefit is that even if they can find a loan, the volume of funding from receivables financing tends to be much higher.

    Google Search For "Business Finance"

    So I put myself in the place of an entrepreneur looking to start a recruitment business in London, at the point that I have identified that I have a funding requirement - so without being specific I might turn to the internet initially, and try a Google UK search for say "business finance".

    Over the last year, there have been somewhere between 25 and 100 searches a day, via Google UK for the phrase "business finance". The chart below shows the volume of searches and how they have moved over that period.

    The chart above demonstrates that there are a number of people using this term, the size of the subset that could be eligible for invoice finance is not apparent though. However, it seems reasonable that this might be a generic search term that could be used by a company with funding needs that could be met through the use of factoring or invoice discounting.

    Search Terms

    The first thing I notice is that as I type "business finance" into the browser (I was using Chrome), Google suggests some search terms to append the phrase "business finance" as follows:

    • solutions
    • course
    • compared
    • car
    • guide
    • brokers
    • jobs
    • uk
    • for dummies

    Some of those might be helpful to a company in the situation described e.g. "solutions", "guide" or "brokers", but some are clearly not really relevant e.g "course" or "jobs". Are the more useful terms likely to help me through to my end goal? Perhaps. If I found a good guide, or broker they might provide a map of the funding landscape that could point me in the right direction.

    In this instance I continued with the simple search for "business finance".

    Search Results

    The very top search result in Google is a paid advert by Funding Circle. The ad clearly states "No startups" so that is not going to help someone in my situation. The fact that they have included that criterion in their paid advert suggest to me that a lot of new start companies have contacted them for funding, not realising that they are going to be unable to help until they are an established business.

    Google Paid Advertising

    This kind of paid advertising is going to be very expensive. A quick look at the projected costs for this term suggests that I might have to pay £28+ per click, in order to appear at the top of Google's search results, and there are no guarantees that people clicking my advert would be potential customers - they could be students or even competitors. The cost of this kind of advertising excludes small companies from appearing in these kinds of paid results.

    The next one down, in the paid results, is another loan option, when I dig around their site (I was careful to avoid incurring any cost for these advertisers) it says they can help startups with up to £25K, but no more unless they have security. If I expect to transact some volume in my first year, that is unlikely to be enough, and the reducing nature of a loan means that I will have to pay it back each month, on a reducing basis. Invoice finance on the other hand, would provide revolving finance that stays in place without me having to meet any capital repayments.

    So I return to the Google search and look at the rest of the paid adverts at the top. There is one provider offering to compare 15 lenders. A number of funders then appear on the page. The top option is a loan broker - so probably not likely to find what I need there. The next is Funding Circle again, then another loan broker requiring 18 months trading history as a minimum, then a business credit card provider, and then one of the invoice finance houses - Ultimate Finance Group. However, the particular product being offered is another loan, and a visit to their site confirms that I would need 2 years trading history. The sad fact is that their invoice finance offering may have suited my situation, and can be provided to startups, although I would not have seen that area of their website from my search.

    Organic Search Results

    So I returned to the Google search page (I am still only on page 1 here) and I selected the top of the organic search results. Remember that these are the options that Google has decided are most relevant to my search term.

    The top result is from the British Business Bank and the entry reads "Finance options for smaller businesses. Explore your finance options with The Business Finance Guide – a journey from start-up to growth . . ." so this sounds more promising. I click a button to open the guide and a question appears about what stage of business we are. I answer a new startup, not yet trading. It then presents me with an array of possible funding requirements that I am seeking to solve i.e. initial funding, launch product, organic sales growth, expand into new markets, expand internationally, invest in new facilities, refinance, capital restructuring, improve cash position and acquisition plans. Quite a diverse list and one that some people are unlikely to fully understand.

    From the list I select "Improve Cash Position", as that seems most closely allied to the needs of a business that will have a tendency to use receivables finance. The site then displays the following message "Unfortunately that option is not normally available to a business that is a startup not yet trading"! Bizarre when there are invoice financiers that will help small startup companies.

    So I return to the organic search results, and the next in the list is a Government site, offering "business finance support". Initially I am presented with a long list of hundreds of options. The top one is titled "Access To Finance Greater Manchester and Lancaster", irrelevant to a London based business. There is a list of selectable options on the left hand side, so I select - Type of Support "Finance" and that has narrowed it down to 118 options! Business stage "Not Yet Trading" reduces it to 50 options, and entering my industry sector as "Services" (there is not an option to enter "Temporary Recruitment" which is what I intend to offer) reduces the list to 41 options. The top option is titled "AD:Venture - Leeds City Region" - again completely irrelevant to me. In fact a quick scan down the list reveals nothing that seems helpful to me. Numerous regional aid entries, grants and special funding niches, such as funding for child care and various other projects with names such as "Innov8+ expertise and advice scheme - Neath Port Talbot". So this site has not helped. The odd thing is that as a finance broker, I know that there is advice about invoice funding on the Government site, it just didn't come up via the search pattern that I described above.

    The next two organic results are for the British Business Bank and the Business Finance Guide, again - duplicates of the result mentioned in detail above, so I skip past those.

    The next result reads "Find a business mentor. Whatever stage your business is at". I would suggest that someone in my situation might discount that option, I think it unlikely that they would be seeking a mentor, but I followed the link to see what it offered. Again I was asked for the details of my funding requirements, I entered the same details and was presented with a list headed "We've found you 62 finance options". Another overwhelming set of choices. So what's the top option? A European Investment Fund, venture capital equity investment - not at all what I am looking for as with venture capital I would have to give up some of the share capital, and control of my business. I would prefer a finance option where I borrow the money I need and it is paid back without the funder taking any kind of stake in my company.

    Invoice Finance Company

    The next option is yet another loan provider, which I discount again, and then finally the third option is Bibby Financial Services, who are an invoice finance company. Their promotional paragraph talks about "invoice finance", mentions various product names such as "factoring" and talks about "cash flow solutions". So I might have stumbled onto something useful here, although as a business finance broker, I am mindful that 1 in 3 eligible UK businesses told our survey that they were not aware that invoice finance was an option for their business.

    Access To The Entire Funding Market

    The other issue is that whilst the Bibby offering may be suitable for me, it is just one of the many options on the market, and if I were seeking this kind of funding I would want to have access to the the entire funding market, and to understand where they sit within that market. There are 90+ invoice finance companies in the UK and there are many differences between offerings, funding levels and pricing. One of our studies showed a 165% differential between the most expensive, and the cheapest factoring deal for a particular company.

    There are numerous different types of invoice funding on the market, selective facilities (where you can choose which invoices to fund), sector specific offerings (such as construction finance and packages for recruiters) and various product options such as bad debt protection and export facilities. Service levels also differ dramatically between providers - with average customer ratings in our surveys ranging from 4 out of 10, up to 9 out of 10. So there is a great deal of value in using the services of an experienced industry broker to guide you towards the most suitable service, rather than just the cheapest or the easiest to find on the internet.

    Difficulties Finding Invoice Finance

    So my quest to find some working capital funding for my London based, small, new start recruitment business was not easy. Many people would have given up way back, or ended up talking to various loan providers. The point is that it is not easy to access the right kind of guidance about business finance and this small study highlights that there are particular difficulties finding invoice finance, as part of a generic search for some funding support.

    Bias In Search Engine Results

    There can be a bias in search engine results. These kind of search engine results are often skewed towards offerings on Government sites, and the websites of large companies that can afford the SEO (search engine optimisation) activity to move up the search rankings. In order to rank well organically for search terms such as the one described above, one would need to seek inward links from Government websites, educational sites, news sites and sites that might be considered competitors. Again, large companies with huge SEO and advertising budgets may be able to pursue this kind of strategy but it is going to be difficult for small advisory firms to compete - and this is often the best place for a customer to begin. This bias is demonstrated by the process described above, which may have caused some users to just give up and speak to their bank.

    Other Routes To Find Invoice Finance

    Indeed, another piece of our research found that 51% of invoice finance users found their way to these products via their bank. With a further 15% going via their accountant. In the case of banks, they may again be a great option, but comparisons need to be made with the independent sector to understand what is on offer across the board. We found customer satisfaction ratings to be 45% higher amongst users of independent providers when compared with bank owned providers.

    Those that go via their accountant may also find the range of options to be somewhat limited. Again, our research suggested that on average, accountants told us that they had links with only 2 different providers - which does not provide access to the full market.

    Best Practice When Seeking Funding

    These results have shown how hit and miss it can be, when a business suited to receivables funding, uses the internet in order to try and navigate the funding landscape. The number of "blind alleys" and irrelevant results show how difficult it is to find your way to the right products. Without having knowledge of the various products that are available they are probably going to struggle to route out options such as funding against invoices. Some advice is needed and working with an independent party would seem to be the most sensible approach. All individual funders will, of course, have their own bias and our research suggests that accountants are unlikely to have the breadth of contacts required to get access to the full market (it must be noted that some accountants do have their own brokerage arms now). 

    The best practice process, through which to find these kinds of services, is to use a good quality business finance brokerage service. Going direct to providers exposes the user to the risk of selecting suppliers that are not going to be well suited to their needs or that do not have the best offering that is on the market. It also shuts off access to other offerings that they are unaware of.

    It is also good practice to look for testimonials about the broker, from customers that they have helped. This will give you some comfort about the service that they provide. It is also prudent to question them about their independence, so that you understand what its limitations may be. For example, they may have investments in particular funders or they may be part owned by particular providers. In either case, you should seek to understand their position, so that you can be assured that you are getting an unbiased opinion of the options for your company.

    A good broker will be aware of what is on the market, will be completely independent of any provider and will be prepared to provide free advice to businesses seeking business finance.

    Share with:

Related articles

  • Read More

    How To Avoid Invoice Fraud

    Working within the invoice finance arena we are always very aware of the potential for fraud. The large amounts of money that a fraudster can potentially extract from finance companies make them attractive targets. However, the measures taken by lenders, to detect and protect against fraud are highly developed. This is not necessarily true of UK businesses generally, who can also fall victim to...

  • Read More

    Invoice Finance Facility

    In the last 12 months, FundInvoice have assisted many hundreds of UK businesses with advice, and in many cases, help finding an invoice finance facility. A 25% increase on last year.REQUEST A NO OBLIGATION CALL BACKWe provide a high quality, personal service to find you the best facility for your business. Our service has resulted in us receiving glowing testimonials from satisfied clients. Our...

  • Read More

    How We Can Help You Find Business Finance

    Having reviewed of our progress over the last year, I can report that we have again managed to increase the number of companies that we have assisted by 25% from last year.REQUEST A BUSINESS FINANCE QUOTEDuring the last year we have published two new free guides:We have continued to specialise in helping customers find business finance in difficult situations, unable to find the business finance...

  • Read More

    Invoice Finance Is Not An Alternative To Having A Viable Business

    I spotted a recent article published by TheBusinessDesk.com regarding the financial woes of a direct mail business called SDM. The business has apparently failed, despite having a 100% prepayment from an invoice finance facility. The article reminded me of how vital it is to have an underlying business that is viable, for invoice finance to help.In this particular case, the article alleges that...

  • Read More

    Close Brothers Invoice Finance

    Voting has recently opened for the Business Moneyfacts Awards 2019. Close Brothers Invoice Finance, part of the FTSE 250 Close Brothers merchant bank, have been the winners of the award for the Best Factoring & invoice Discounting provider, for the last 5 consecutive years. In addition they have recently won Asset Based Lender of the Year 2018 at the Insider - Dealmakers Awards. Quite an...

  • Read More

    Prepayments Against Invoices To NHS Trusts

    I saw an article about slow and late payments from NHS Trusts in HSJ online magazine (27/09/18). The article alleges that according to data obtained under a freedom of information request, 44 out of 135 acute trusts paid less than half of their invoices on time during a period between 2017 - 2018.These slow payments may be causing a significant cash flow problem for non NHS suppliers to NHS...

  • Read More

    Finding Prepayments Against Applications For Payment

    I wanted to find out how difficult it would be for a construction sector company to find prepayment finance against applications for payment.As I have seen previously with other searches, Google delivers quite an unhelpful set of results when one searches for say "construction finance against applications for payment". This might be a typical search term used by a construction sector customer...

  • Read More

    Can You Finance This New Startup?

    Are you a lender that could help finance this new startup?CONTACT USWe are trying to raise business finance of £75K (less might still be workable) for a new startup business that is acquiring the licence to operate the business of an existing company (that will no longer trade going forwards).The existing business has operated for several years, and its future trade will be taken over by the new...

  • Read More

    Explaining Invoice Discounting And Factoring Charges

    I wanted to share this really good example of how someone not familiar with invoice discounting and factoring quotations can end up misinterpreting the quotes, when they try to make a comparison - ending up "comparing apples with oranges".GET A FUNDING QUOTEIn this particular case the prospect had two quotes, one from a provider we had found for them (the cheaper quote) and one they had sourced...

  • Read More

    Funding Self Insure And Accident Management Company Invoices

    Whilst there are several car crash repair invoice finance companies, that will handle invoices to car insurance companies, not all of them will handle "self insured" invoices, or invoices to accident management companies (third parties that deal with accidents)."Self insure" and accident management company (AMC) claims are also able to be funded, under an invoice finance arrangement, by our...

  • Read More

    Budget For Your Invoice Finance Charges

    We had an enquiry recently for funding for a small recruitment startup that was expecting to turnover a few hundred thousand pounds sterling. We provided them with a quote for factoring, prepayments against invoices and a credit control outsourcing service.The quote we initially found was for an all inclusive fee of £3,800 + VAT per annum. Which is reasonable for a whole turnover facility that...

  • Read More

    How Many Invoice Finance Quotes Do You Need?

    We had an enquiry from a prospective client who was looking for invoice finance quotes and, as is sometimes the case, they told us they hadn't been speaking to anyone else. However, once we started searching the market for them, it became apparent that they had used at least 2 other brokers already - each of whom would have contacted numerous funders. One of our funding partners had received the...

  • Read More

    Updated Info Pack From FundInvoice

    We have just updated our info pack, which is our version of a brochure outlining our services. Its in a PDF format and it details the business funding and invoice finance quote search and advice service that we offer at FundInvoice.You can download a copy of our brochure/info pack here: FundInvoice Info PackIt includes:If you would rather just speak to someone about what you need please call...

  • Read More

    Invoice Finance Practices To Watch Out For

    Whilst having a meeting with one of our funding partners, we started discussing practices that can mislead customers, that we have come across around the invoice finance industry. I thought it might be helpful to put up a list of these practices so that customers can watch out for them.I have posted before about the research we have conducted into the setting of minimum fees. Most of the whole...

  • Read More

    Why Factoring Is Used

    In my blog post yesterday, I wrote about the perception of one of the invoice finance providers that factoring is growing in popularity. To a certain extent, in recent times, the industry statistics do show a slight swing towards factoring products, as opposed to invoice discounting.This post just explains the reasons why companies use factoring rather than other forms of invoice finance.The key...

  • Read More

    The Difference Between Profits And Cash Flow - Need Help?

    There is a huge difference between profits and cash flow. A business can be very profitable but still have poor cash flow - profits are no guarantee that you won't run into a cash flow problem. Even the big businesses can feel the effects of cash flow restrictions.In high level, layman's terms, profit is what you make on your sales, your profit margin. Cash flow is how the money from sales moves...

  • Read More

    34% Average Invoice Finance Cost Saving Achieved

    From time to time we check the average cost savings that we are achieving for our invoice finance customers.As at August 2018, over the previous 12 months, we have found average cost savings of 34% for our invoice finance customers seeking price reductions on quotes received from other invoice finance companies.CHECK HOW MUCH YOU COULD SAVE ON INVOICE FINANCEWe achieve these savings by being able...

  • Read More

    Nucleus Commercial Finance Lowers Its Unsecured Business Loan Rates

    Nucleus Commercial Finance has, as of yesterday, lowered its unsecured business loan rates once again.Interest rates now start from a flat rate of just 5% (for an "A band" credit risk client, with a business loan on a 3 to 12 month term).CONTACT NUCLEUS COMMERCIAL FINANCEThey are able to offer longer terms, up to 36 months, and they will deal with lower credit risk clients, but the rate will...

  • Read More

    Hive Project Strike Deal With Gosocket Over Half Billion Of Blockchain Based Invoice Finance

    It was nice to be contacted by a representative of the Hive Project to advise, prior to general release, that they have struck a huge deal with Gosocket, to establish a joint invoice financing platform, in Q3 2018, based on their blockchain invoice finance technology.They report that there are half a billion of eInvoices ready to be funded via this portal.Gosocket is a network that connects...

  • Read More

    Free Guides Relating To Business Finance

    We have a number of related advice articles and guides about how to stop using invoice funding:...

  • Read More

    Tony Lee - RAFTS Regulatory & FinTech Services

    Pleased to catch up recently with Tony Lee, a colleague of mine from when I worked as a business consultant. He has just launched a new consultancy service called RAFTS (Reg & FinTech Services), which may be of interest to the financial services organisations that read this blog.If you are looking for support with any aspects of financial services, you can use the following contact form to...

  • Read More

    Same Day Business Funding - A New Record Turnaround

    We have just set a new record for the time it takes to turnaround a business finance enquiry. We arranged same day business funding for a client, with approximately 7 hours between enquiry and them receiving cash from the finance company.That's a new record turnaround for us!REQUEST A CALL TO DISCUSS FUNDINGWe were contacted in the morning by a car crash repairs coachworks business that were...

  • Read More

    5 Financial Mistakes You May Have Already Made

    Below is a list of five common financial mistakes, that you may have already made within your business.It is very common within a business for the prime movers to use their own money to support its cash flow. This may be in the form of a cash loan to the business, or it may be that you pay for business expenses on a personal credit card, or from your own cash savings.This may seem like a...

  • Read More

    Resubscribe To FundingVoice Magazine Ahead Of GDPR

    There has been a deluge of GDPR related opt in requests received recently. It might seem like every business you deal with are contacting you to ask you to confirm your marketing preferences or to opt into receiving their messages.Put very simply, GDPR (General Data Protection Regulation) is new legislation that relates to your data protection rights, and it is due to take effect from tomorrow....

  • Read More

    10 Ways To Make More Money

    These are 10 simple ways that you can potentially boost your company’s income, and make more money.1) Increase your prices by a fraction – if you don’t already increase your prices annually, in line with inflation, you could introduce this, or you could make a small price increase in order to cover rising cost.2) Ask your existing customers for more work – this could be in the form of...

  • Read More

    Calculating The Cost Of Leaving Invoice Finance Or Factoring

    Calculating the cost of leaving invoice finance depends upon the type of facility that you have, and the nature of the agreement that you have entered into.Termination GuideThere are various aspects to calculating the overall cost. Firstly, there may be a termination fee. Secondly there may be additional costs that you will incur by having to undertake certain tasks yourself, that were previously...

  • Read More

    Factoring Advantages And Disadvantages

    If you are looking at using factoring as a source of funding for your business, you may be interested to understand the pros and cons.Below I have set out the factoring advantages and disadvantages in simple terms, so that you can make an educated decision.The biggest advantage is the improvement to your company's cash flow. As you raise new invoices to your customers on credit terms, they are...

  • Read More

    IGF Have GBP30m New Funding Line From The British Business Bank

    Hot off the press, we hear that IGF (Independent Growth Finance) have a new £30 million funding line from British Business Investments, which is part of the British Business Bank.The British Business Bank, which has it's headquarters in Sheffield, is a development bank that is wholly owned by the UK Government. It was originally announced, back in September 2012, with the objective of increasing...

  • Read More

    Free Confidential Advice About Business Problems

    If you are having business problems, you might feel that you would benefit from a free discussion, with an expert, in confidence. You could benefit from free advice from external parties that may be able to help.There maybe a variety of different business problems that you are experiencing, but some of the common ones may be a lack of sales, poor cash flow or potential insolvency. In each...

  • Read More

    Debtor Backed Loan With No Trust Account

    If you are looking to get out of factoring you might be interested in an option that presents a halfway house solution. This particular product offering is what could be described as a debtor backed loan.It is early days with the provider, we are in the process of agreeing terms, but is an interesting product that could be very attractive to businesses that are concerned about having funds paid...

  • Read More

    Finance Against Fee Notes For Accountants

    There is a specialist niche form of finance available to accountants who raise fee notes as they undertake work for their accountancy clients. These notes are not invoices, they are just a record of work that has been undertaken. However, funding can still be accessed against them.Finance can be provided against your "fee notes", raised to keep track of the work that you are doing for your...

  • Read More

    Cheap Invoice Finance Offer

    Our funding partners often come up with invoice finance offers and discounts to try and attract new clients. We have had one offering from one or our partners who is willing to offer a pricing discount to just a handful of new customers each month, in order to help get them across the line and onto their book as clients.This offer hasn't been added to our list at this time as we have only just...

  • Read More

    5 Tips If You Only Have One Customer

    Most businesses start with one customer, however remaining reliant on just one customer can have serious consequences, which I detailed in my recent blog post "Help with invoice finance prime debtor problems". Whilst the problem is particularly problematic if you are using factoring or invoice discounting, the risks to your business also apply if you don't use this type of funding.The...



Examples of just a few of our finance partners:

pulse cashflow finance
lloyds bank
woodsford tradebridge
leumi abl