Invoice Finance

Enness is a leading broker of high-value invoice finance. Enness’ clients include entrepreneurs, business owners and private businesses looking to borrow significant amounts against their invoices. Whatever you need an invoice financing facility for, and however much you are looking to borrow, Enness will help you secure the most attractive rates and terms.

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Invoice Finance

Enness is a leading broker of high-value invoice finance. Enness’ clients include entrepreneurs, business owners and private businesses looking to borrow significant amounts against their invoices. Whatever you need an invoice financing facility for, and however much you are looking to borrow, Enness will help you secure the most attractive rates and terms.

Get in Touch

Invoice Finance

Invoice-based financing is a specialist type of lending available to businesses. Your company can take out a loan that is secured against unpaid invoices owed to you by customers or clients. Invoice-based financing is a short-term way to generate working capital for your firm. Companies often use an invoice financing facility to:

  • Help alleviate short-term cash flow issues
  • Access cash quickly to seize an opportunity or pay off an urgent debt
  • As a proactive measure to budget and manage cash flow if your business is making a big-ticket investment, i.e., M&A, reinvestment, etc.

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How Does Invoice Financing Work?

Finance-based invoicing works when a lender gives you a portion of your invoices in cash immediately – usually within just a couple of working days. As a result, working capital is available to your business instantaneously, rather than waiting for the usual invoice payment terms. Invoicing finance is usually used by companies with payable terms of 30 days net (or more) to pay an invoice.

Depending on your lender, invoice financing facilities can work in one of two ways:

Invoice Discounting

As you issue new invoices to customers or clients, you inform your lender of the invoices raised. Lenders will immediately issue a portion of the invoice to you in cash. The amount you are paid is usually around 85% of the total invoice amount. When your client or customer has paid you, you then pay back the lender the amount they let you borrow, plus a payment covering the lender’s fees and interest. Fees and interest are usually eligible as a fixed percentage of every invoice, but you can pay these charges as a lump sum.

The advantage of this system is that you keep lending "in-house": your clients will be unaware of a lender’s role or that you have borrowed money against invoices. That said, expect lenders to be active in ensuring you follow up assertively with late payments. Lenders will want to be involved in recouping their money as soon as possible, even if they have no direct contact with your clients. They will also need to ensure they are reimbursed when your invoices are paid or buy a set date, so expect to need to give regular updates and reports on payments and incoming cash.

Invoice Factoring

The mechanism for invoice factoring is slightly different. In this case, your lender will essentially buy your open invoices from you. How much the lender will buy them for will depend on your circumstances and the services or products you offer, but you may be offered up to 80% of the cost of the invoice. The remaining amount due to you (i.e., the final 20%) is repaid when your client or customer pays their invoice, minus any fees or interest due to the lender.

While this can be advantageous in the sense that you receive a fixed sum and you don’t have to make any repayments to your lender, you need to be aware of some nuances. In this case, because your lender becomes the creditor, your clients will pay your lender directly. Your lender will also be able to contact clients directly to follow up on late payments per their own policies and credit control processes. Clients will need to be made aware of why there are changes to who they are paying, and you may need to consider how you approach this from a reputational standpoint.

Costs

For significant finance invoicing deals equalling several hundred thousand pounds or more, lenders present offers on a case-by-case basis only. Every lender will have its own lending criteria and risk appetite, which will affect what you pay. Overall, costs will depend on your business, how much you want to borrow, what you are borrowing for, and the lender's risks.

The stronger your business’ financial position and the less risk there is that invoices won’t be paid, the less the loan is likely to cost. For more complex transactions, or if you perform very niche services or produce very specialist products, you are likely to pay more.

Using Finance Invoicing

Invoice-based lending needs to be carefully considered. Enness will talk you through all the elements you will need to think about and understand to get the most out of this type of borrowing.

Invoice financing is not a way to circumvent issues that have arisen from clients that consistently pay late. Likewise, invoice-based lending doesn’t provide a mechanism to cover bad debt by shifting it around your P&L. Although this type of lending unlocks working capital, your business will need to be on solid footing from a financial perspective for it to be an option. Lenders will accept short-term cashflow issues, but they will not let you borrow if your company is in dire straits or if there is a fundamental weakness in your business.

Your lender will want to see solid proof that you are borrowing against invoices that you reasonably expect to be paid within your usual payment terms. You will need to:

  • Provide financial statements and evidence that your business has no issues collecting money owed to you through invoices
  • Demonstrable evidence that your clients and customers pay on time
  • Showcase that you rarely have disputes around invoices raised. Lenders will look to ensure that amounts aren’t regularly contested, invoices aren’t written off, and there isn’t pushback on services performed/products delivered to clients in terms of quality, overspend, etc.

If you have a book of bad debt or a portfolio of clients or customers that don’t pay on time, this type of lending will be a real struggle, even with Enness to help you.

When it comes to invoice-based financing, the devil is in the detail. Companies with solid finances, great clients, and a track record of 100% invoice payment by due date are turned down for this type of lending all the time. Usually, this is because they haven’t presented lenders with a compelling or completely watertight case for borrowing.

How you present your situation, how you explain to lenders what you need finance for, and why you want to borrow is critical to this type of loan. It isn’t enough just to present the facts. Your broker will go straight to the best lenders, many of whom you may not have heard of through the usual channels. Then, when it comes to negotiation, Enness will be able to help you highlight the strengths of your case and bring forward the elements that will unlock the very best rates and terms.

Accessing High-Value, Fast Invoice Finance

Most businesses can benefit from invoice financing, regardless of whether you supply goods or services. There are several excellent lenders in the market, although many of these primarily service small and medium-sized businesses. These lenders often offer relatively small loans, presented as package deals with set rates and terms and no room for negotiation.

If you need a high-value loan against your invoices, you will most likely need access to niche lenders. In this part of the market, mainstream lenders may not have a desire to provide significant loans: they are limited by how much they can lend and may not offer you as much as you need. Mainstream lenders also tend to prefer to spread their loans over several borrowers to mitigate risk rather than lending more to fewer businesses. As a result, you may discover it is hard to find a lender that can cater to your needs and offers you a flexible deal.

Speed will also be a key consideration. Invoice-based financing is a short-term solution, but it is usually sought when you need to resolve a working capital issue quickly. You may need capital to pay employee salaries, pay off a debt or leverage an unexpected opportunity. Working with a broker like Enness who can unlock liquidity and keep a deal moving in the timeframe you need will be critical for your success when you are against the clock.

Using a specialist lender is often the best way to secure high-value finance invoicing. There are several options at the top of the market, but many of the players that operate in the space require introductions or don’t offer direct contact routes – you will need to have a referral. With access to more than 500 lenders, Enness will be able to source and negotiate the best invoice finance deal for your business. 

Why Enness As A Broker For Your Invoice Financing Facility?

Enness specialises in brokering high-value invoice financing, a specialist and niche part of the market given the risks and complexity involved in these types of transactions. There is no minimum finance invoicing loan amount Enness brokers, but you will usually need to be in the market to borrow several hundred thousand pounds.

Clients usually turn to Enness when:

  • You want to borrow several hundred thousand pounds against your invoices
  • You want to borrow a significant amount, but you have a particularly complex transaction or a situation that mainstream lenders in the space can’t or won’t cater to (i.e., you raise significant invoices against a small client base, or you work in a very niche industry)
  • You need access to working capital quickly and need to source and negotiate rates and terms in the minimum timeframe 

Enness will always start by understanding your needs. There are different ways to go about invoice financing, and some options may be better for your business than others. As well as the best terms and the best rates, Enness will be thinking about what financing package will be most beneficial to you and how it should be structured.

Enness can deliver a negotiated offer for your review in 24 hours if required. With access to more than 500 global lenders and with an ability to source, negotiate and close transactions in the minimum timeframe, Enness can help you unlock working capital in just a few days. As well as negotiating the deal, your broker will also be on hand to remove roadblocks, keep all parties focussed on closing the deal on time and acting in your best interests at every stage in the process.

In much of the market, lenders prefer borrowers to opt for an "all or nothing" approach. In other words, to be eligible, all your invoices need to be put forward to the lender who will let you borrow against them. With Enness helping you access the right lender, invoice financing will be much more flexible and suited to the needs of your business. If needed, Enness will negotiate that only certain invoices are used for an invoice financing facility: that might be a specific business line, certain clients or invoices that are more than a certain amount.

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Contact Enness

Enness has both the track record and an unparalleled network of specialist lenders to secure the most competitive and advantageous invoice finance for you. 

Contact Enness to have a no-obligation chat about your needs. Enness will talk you through how a brokers can help you structure and streamline this specialist type of financing.

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