In this blog we try to explain the difference between invoice factoring and selective invoice finance. Both of these products use outstanding sales invoices within the business as an asset to generate cash.
Selective Invoice Finance is where you choose which individual invoices you would like to fund and when.
This type of funding works if you have a seasonal business, large orders to deliver or a big bill to pay. If your business relies on a particular customer or contract, and their business represents a large chunk of your revenue, selective invoice finance would be a right choice for you.
When would you use Selective Invoice Finance?
You have occasional and intermittent cash flow issues
You sometimes take on larger jobs which need additional funds
You have an some large payments to make, such as tax liabilities
Your sales ledger is highly concentrated i.e. you have certain customers who take up a large proportion of your sales
This service is different to Selective Invoice Finance as it provides you with funding across all of your sales ledger and customers. You can borrow up to 90% of the gross value of the ledger.
The big advantage of these facilities is that the funds advanced are a percentage of your sales ledger, which it means that as your sales increase so does your facility. You don’t need to worry about future cash flow requirements as the Invoice Finance facility automatically grows with you.
When might you use Invoice Factoring?
You are in a high growth stage and need additional working capital
You want to pay suppliers early and receive a settlement discount
Major customers are extending payment terms
Your cash flow is tight and important payments are being missed – e.g. HMRC payments or key creditors.
Your bank overdraft has reached it limit but you need additional funds
With both Factoring and Selective Invoice Finance you can choose to add Bad Debt Protection click here for more information. which will protect you against non-payment and customer insolvency. This is a cost effective service which gives you with peace of mind you are covered.
We offer Selective Invoice Finance to any business looking for funds of £25,000 or more. This flexible facility is put in place very quickly and has no long term contract so you can use it, as and when you need to.