How does invoice financing work?

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The following example is a step by step explanation on how invoice financing would work for your company.

1. Invoice Finance Company ("IFC") agrees to factor your company's invoices on the following terms:
   • 6% Interest Rate per annum on funding
   • 2% Service Charge against turnover
   • 80% Advance Rate against approved invoices
   
   
2. Your company agree provide your services to a new client ("NC")
   
   
3. Your company gets approval to finance NC invoices from IFC
   
   
4. Your company completes an order for NC worth £1000 and want to invoice NC for the £1000
   
   
5. Your company informs IFC that you want to invoice NC for £1000. They send NC an invoice for that amount.
   
   
6. Your company account has been updated as follows:
   • Amount available for immediate advance: £800
   • Service Charge: £20
   • Amount available on collection of invoice: £180
   
   
7. Your company takes advantage of the£800 advance immediately
   
   
8. 30 days later NC pays their invoice and you get access to the rest of the invoice £180 less the interest of £4 (the equivalent of 6% interest on £800 per year for one month).
   
   
9. You withdraw the £176 from the account.

Click here for quotes from over 15 invoice financiers.