Help Paying VAT Bills With Invoice Finance

We found that 33% of existing invoice finance users surveyed, told us that they would recommend invoice finance to businesses that needed help paying their VAT bills. We also ran a piece in the October 2015 edition of FundingVoice magazine about the opportunity to use an invoice finance arrangement to catch up with your quarterly VAT payments.


The process would be straight forward to release maybe 75% to 85% of your outstanding sales ledger through an invoice finance arrangement. This working capital could be used to settle your VAT bill.

An Example Of Using Invoice Finance To Pay A VAT Bill

As an example, lets look at a business turning over say £100K + VAT per month (1.44m pa including VAT), that's £120K per month including the VAT. So with VAT of £20K per month. Lets assume that there is £5K of purchase VAT to offset each month - that would make the quarterly VAT bill c. £45K.

Say the outstanding sales ledger was 2 months sales, that would be £240K of outstanding invoices against which lets assume a conservative initial payment, from invoice finance, of 75%. That could release £180K of funding on day one - more than enough to comfortably cover the VAT bill and still leave a chunk of additional working capital available. Of course, if the VAT liability were higher, it may still be possible to clear it or make a down payment as part of agreeing a repayment plan with HMRC. 

Other Uses Of Invoice Finance

It has to be said that, within our survey, there were far higher numbers recommending invoice finance as a funding source for fast growing businesses (68%), but if you are behind with your VAT payments it is probably a case of needs must in order to get that liability settled, and up to date. Invoice finance can be used to achieve that.

Source: Invoice Finance And Late Payment Survey - October 2015 (100 respondents - all existing users of invoice finance).

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Examples of just a few of our finance partners:

funding invoice
lloyds bank
apollo business finance