Get invoices paid faster with Know-it & Swoop

Know-it has teamed up with Swoop to help your business improve cash flow and get paid faster. A dedicated Funding Manager will help you find a tailored finance solution specific to your businesses needs.

Is my business eligible for invoice finance?

If your annual turnover is a minimum of £30,000 and you get paid by invoice on 14-day terms or more, then yes, invoice financing could work for you. Key considerations for approval include:

Minimum turnover
Your customers are businesses, not consumers (B2B)
Invoice terms that fit the lender’s criteria
Good customer payments history
Most recent set of accounts

Invoice discounting

Borrow against unpaid invoices and retain control of your sales ledger

Invoice factoring

Free up cash fast by “selling” your invoices at a discounted rate

Invoice finance calculator

Use our handy invoice finance calculator to get an understanding of how much you could release from invoices owed to you.

Invoice value

.00

Advance rate

Fee

* Will be paid to you when your client has paid the invoice in full and within the agreed invoice term.

This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.

Your results

Advance amount

£- (-%)

Then

£-*

Estimated fees

£-

Get a quote

How do I apply?

Quickly check if you qualify

Have your financial statements and invoice details ready.

Apply online in 10 minutes

Tell us about you and your business with our simple application.

Get your decision

If approved, you’ll receive a no-obligation, personalised quote.

Receive your funds

Once you accept, we run some final checks to process your funding and deposit the money straight into your account.

What costs are involved?

Invoice discounting and invoice factoring have different cost structures. Invoice financing companies charge interest on the loan, plus an administration fee. Factoring agents charge something called the ‘factor rate’. This is a hybrid calculation, and it works out as a percentage of every invoice and a ‘time-charge’ that reflects the length of time that credit is extended. Because factoring agents take over the company’s sales ledger and assume responsibility for chasing customers for payment, their administration costs are higher than those for invoice financing. This means factoring usually costs more than invoice financing.

Invoice discounting costs explained

Invoice financing costs are straightforward. Borrowers are charged interest and credit management fees. Typical interest rates range from 1.5% to 3% over Bank of England base rate and are calculated daily. Credit management fees typically vary from 0.25% to 0.5% of turnover. Interest and fees are usually billed on a monthly cycle. There may also be other costs – such as an origination fee for processing the loan.

Invoice financing companies will consider risk when calculating the interest rate and their management fee. The credit-worthiness of your customers, the length of time they take to pay, and your business’ credit history are key parameters in this calculation.

Invoice factoring costs explained

Invoice factoring costs are called the factor rate. It is based on the level of risk and the volume of invoices. Factors like low risk, (your customers are unlikely to default on payment), and high volume, (the cash value of factored invoices is high).

The lower the risk and the greater the volume, the lower the factoring costs
The higher the risk, and the lower the volume, the higher the invoice factoring costs.
Factors consider the following when calculating your factor rate:
The cash value of the invoices you will be factoring: the more money being processed, the lower the rate. This is probably the biggest determiner of your factor rate.
The size of each invoice: it takes the same amount of work to collect a small invoice as a large one. Therefore, it pays to have fewer large invoices rather than lots of small ones.
The industry you work in: the factor will assess the track record of your industry when determining your factor rate. The more risk, the higher the factor rate.
How reliable are your clients: clients who have a track record of paying on time drive a lower factor rate than those with a poor credit history.
Your business credit rating, history and turnover: Some factors in the UK will want you to have been trading for at least one year. This can be a problem for startups. They may also expect you to have a minimum annual turnover, for example, £30,000.

Factor rates can vary from 0.5% to 5% of the invoice value. This is applied as a fee and for a set time – for example, 3% for the first 30 days of an advance against the invoice. The factor will also charge a further percentage if the advance is outstanding beyond this initial period – for example, 0.5% for every 10 days after the first 30 days. Some factors set a ‘flat rate’ that does not have an escalating charge rate. The cost is the same, even if the invoice takes more than 30 days for payment.

Pros and cons of invoice finance

Invoice financing and invoice factoring have their unique pros and cons:

Invoice factoring is more expensive than invoice financing
Invoice financing leaves the company in control of the sales ledger, but this also means they must still spend time chasing customers for payment
Invoice factoring sells invoices to the factor, who then assumes responsibility for pursuing customers for payment
Invoice financing is confidential. Customers may never know invoices are being used as collateral for borrowing
Invoice factoring is not confidential. Customers will be aware that the company has sold control of the sales ledger
Invoice factoring may not be available to most startups
Invoice factoring and invoice financing can release up to 95% of invoice value in less than 48 hours.

Is invoice finance a good idea?

For businesses that need to boost their cashflow, invoice finance can be an ideal funding solution: no need for hard assets, no personal guarantees, get up to 95% of your invoice value as soon as you raise it, and eliminate months of waiting for customers to pay.

If you are seeking a flexible and scalable solution to your cashflow problems, and the higher costs associated with invoice finance are acceptable to you, invoice finance is worth considering.

Keep in mind that invoice finance is designed to defeat cash flow issues; it is not a replacement for revenue. While loans and overdrafts can give you a cash injection when business is slow, invoice finance relies on your business successfully winning sales and raising invoices. If you fail to secure new sales, invoice finance will not solve underlying problems. Low revenue is always low revenue. Invoice finance alone cannot get you through a ‘dry patch’.