• Invoice Finance Ranks As Highest Alternative To A Loan

    Invoice funding an alternative to taking out a CBILS loan.

    New research conducted by MarketFinance (reported by Business Money 23/03/20) canvassed the views of business owners about the range of measures being offered by the UK Government, to support them financially through the novel coronavirus pandemic.

    Expected Funding Delays

    Some 67% said they believed that funds would not reach them in time, and that they will run out of cash before Easter.

    Whilst this is concerning, there are established independent funders that can deliver funds within a few days.


    Caution About Taking Out Loans

    Only 52% are apparently considering using the coronavirus Business Interruption Loan Scheme (CBILS) to support their businesses, because 67% already have a pre-existing loan, and having to make repayments for any additional loan is their biggest concern (36%).

    With the research suggesting that a third of businesses expect at least a 50% reduction in revenue, it is not surprising that they are cautious about taking on additional loans, that they may struggle to repay.

    An Alternative To Repaying Loans

    There are alternatives to taking out, and having to repay business loans. In the study, borrowing against invoices for completed work was the highest ranked alternative to taking out a loan with 48% considering the option over the next year.

    See our: Guide To Invoice Funding.

    The Advantage Of Invoice Funding Over Loans

    The advantage of funding against invoices is that instead of taking on the debt associated with a loan (that you repay in installments), you are releasing the funds from invoices for work already completed. This money is already yours - you are just accessing it more quickly than the time it takes your customers to pay. This type of facility accelerates your cash flow.

    You can do this for all your sales ledger or you can opt for a selective facility whereby you choose invoices to be funded, without any commitment. You can usually also take out this type of funding if you already have a business loan, or overdraft in place.

    Whilst payment terms in the UK are typically stated on invoices as 30 days, customers will frequently take longer to pay. The impact of the virus, and the lockdown is likely to see customers taking even longer to pay invoices. The ability to release funds immediately could be very positive for the cash flow of UK companies.

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