Slow-to-pay customers shouldn’t hold your business back: Swoop’s solutions can save your business

Invoice finance is a popular way for businesses to unlock the money owed to them.

From the earliest days of Swoop, a recurring theme from customers calling us in a panic was that they had bills to pay, but they didn’t have the cash to cover them.

Inevitably, the money was out there somewhere, owed to our customer, but either the due date was too far away, or the customer hadn’t paid on time.

With payment terms sometimes stretching to 90 days and with supply chain issues still causing log jams, this problem has grown worse for some sectors. It is particularly heartbreaking to see when a business is otherwise sound, but cash flow issues mean they can’t make the wages bill. It’s the kind of thing that can shut down a company.

Cash flow issues are the number one reason why great businesses struggle which is why invoice finance is something every business owner should be aware of.

What is it?

Invoice finance allows a business to raise money against the value of invoices already issued. Payment is usually made within 48 hours of submitting your invoice.

Invoice financing works much like a revolving credit line or a series of short-term bank loans – except there is usually no requirement for the borrower to provide either assets as collateral, or a personal guarantee from the company director(s).

Who can apply?

Businesses must have a minimum of £30,000 annual turnover and get paid by invoice in 14 or more days.

The final percentage that a lender can provide will depend on factors such as payment terms and the type of product or service a company sells.

How much can I borrow?

Lenders typically offer between 75 and 90 percent of invoice value, depending on the circumstances of the business.

How does it work?

With invoice finance, you issue an invoice to a customer, then you receive a percentage of the invoice value as a loan from a lender (the invoice financing company).

You retain control of your sales ledger and are still responsible for chasing customers for payment.

Customer payments are made into an account controlled by the invoice financing company, but which appears to be controlled by you: in most cases, customers are not aware that you have used their invoice as security for a loan.

After payment, the lender will deduct interest and fees and transfer the balance to your bank account.

Does every invoice I issue have to go through this process?

No. Selective receivables financing means that you can choose the customers and invoices that you want for the loan. You only need to use invoice financing used across your whole sales ledger if you want to.

At a glance, here are the chief benefits of invoice finance:

Quick and easy access to funds
Flexible repayment options to meet your needs
No hidden fees or charges
Improved cash flow and financial stability

With uncertainty becoming a fact of life for many businesses, it can be useful to know where you would find additional sources of funding even when there is no current need. Invoice finance is a great option for businesses that have a healthy order book and need to access capital before their customers pay.