Invoice Finance is a facility that enables you to get the money from your invoices on the day you raise them rather than wait 30, 60 or however many days it normally takes. We may also help with chasing and collecting the invoices on your behalf.
Frequently Asked Questions
We are transparent in all our dealings with clients and customers and will explain everything as best we can. If you have any questions that are not answered below then please feel free to contact us directly for a no obligation, informal conversation.
What is Invoice Finance?
How does Invoice Finance work?
This depends on the facility that you choose:
Invoice Factoring consists of the following four steps:
- You send your invoices to your customers as normal but with a notice asking them to pay us.
- You send a summary sheet and a copy of the invoices to us (this can be sent on-line). We then make available up to 85% of the invoice amount.
- You request funds and we transfer them by electronic payment directly into your bank account.
- When we collect from your customer, we return the balance (e.g. 15%) to you.
Confidential Invoice Finance works in the same way but you do the credit control and your customers are not aware of us in the background.
Who is Invoice Finance for?
Anyone who needs finance to run their business can use Invoice Finance. It is for businesses that offer credit terms and have to wait to get paid but have to pay suppliers or people quickly. It suits young, growing companies because they often do not have sufficient capital to grow their business and they value having help with credit control.
What are the benefits of Invoice Finance?
The main benefit is peace of mind:
- You do not have to worry about having enough funds to pay suppliers, people, etc...
- You also can choose to use our experienced credit control department to help you with credit checking and chasing invoices.
- It also means that you can separate your sales and collections functions.
- If you choose to have bad debt protection you don't have to worry about customers not paying.
It can also have other benefits e.g. You may be able to negotiate settlement discounts for early payment to your suppliers.
What does Invoice Finance cost?
There are two main charges:
- Service Charge: This is charged as a percentage of the value of your invoices and will normally be between 0.5% and 3.0% of the invoice value.
- Discount charge: This is the rate of interest that is payable on funds advanced to you; this is expressed as a percentage over bank base lending rate, calculated on a daily basis and charged monthly. This is usually charged at 2.5% over bank base rate.
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How much of the invoice value do you advance?
We make available up to 85% of the invoice value to you, you request funds from us and we transfer them electronically straight into your bank account. Note that you only transfer what you need, you don’t have to use your whole availability.
The remaining 15% is paid to you when your customer pays.
How long does it take from you receiving my invoices to me getting the funds in my bank?
Typically if we receive your copy invoices in the morning you can have funds in your bank in the afternoon.
Can I factor selected invoices only?
Yes, as long as the customer is well credit rated or credit insured. But we do need total invoicing of over £100,000 over a year.
Can you protect my business against bad debts?
Yes, we can provide you with bad debt protection that covers your invoices against non-payment. The charges for this are based on your sales turnover, payment record and bad debt history. They are charged as a percentage of the invoice value.
We are a new start company, will we qualify for invoice finance?
Yes, as long as your projected sales turnover is in excess £200,000 in your first year.
Does a bank loan make more sense for my small business than Invoice Finance?
It depends on what you need funds for. If you are buying plant or equipment or property then a bank loan may be more suitable to your business. But if you need funding for cashflow i.e. because you are running out of funds to pay suppliers, staff etc. then Invoice Finance is definitely more generous and more flexible.
If you are managing my credit control, what will the impact be on my customers, and how might it change our existing relationship?
The only difference to your customer is where to send the payment and who the payment is made out to. In fact, your customer relationships will most likely improve with us managing the credit control. You no longer have the uncomfortable task of collecting payment from your customers and your conversations with your customers will be strictly about new sales and ongoing business.
If I ask you to manage my credit control then how will our customers be treated by Calverton?
Calverton treat your customers like they are their own, with the utmost business professionalism. We have a vested interest in your customers’ satisfaction and would never want to do anything to upset them and lose their business (or yours). But here’s what one of our clients says:
"My name is Antony Meade and I am the Financial Director of Family Matters Fostering Ltd. I have now been working with Calverton since April 2001. Over the last thirty years I have worked with a fair number of large and small banks and factoring companies in a variety of business arenas. When Calverton recently asked me to comment on their service to Family Matters Fostering Ltd, I was pleased to do so. Why? Because they have been a delight to work with. They are every Director's dream when it comes to a financial institution. I have found them to be prompt, courteous, efficient and most importantly - flexible!! They have been able to give us a deal that no other factoring company or Bank have been able to come near in years and - quite a few have tried - and we feel that we get real value for money from their service. If you currently factor or are considering factoring as a way of assisting cash flow I thoroughly recommend you contact them. Not all Banks are the same - and not all factoring companies are the same either! Calverton have provided the same level of commitment and service to us for five years now - and I can't say that I have experienced that level of consistency with any other financial institution that I have ever dealt with."
What will my customers think if they know that I am using an Invoice Finance Company?
More than 40,000 UK businesses use invoice finance facilities. It has become a recognised and widely used form of finance for small to medium-sized businesses. If your customer has a large number of suppliers they are bound to be dealing with Invoice Finance companies already.
Can you supply me with references from existing clients?
Certainly. We are very proud of the services we offer and we are more than happy to provide references.
What’s the difference between Factoring and Invoice Discounting?
There are two main differences:
- Factoring includes a full sales ledger management service whereas with an Invoice Discounting facility the ledger management is left to you.
- With factoring customers’ payments are sent to us at our offices in Milton Keynes, all cheques to be made payable to Calverton Factors Limited. With Invoice Discounting the payments are still made to you. The facility is not disclosed to your customers.
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How long does it take to set-up a facility?
We will come and see you to discuss your requirements in detail. From then it normally takes 2-3 days to set up.
How will my customer know to send the invoice payment you?
You write to all your customers at the start of the factoring agreement to notify them of the change in payment procedures. You also put a notice on all your future invoices notifying your customers of who and where they should pay or we can supply you with labels to put on your invoices.