Invoice Finance

Invoice Finance is a financial solution that allows businesses to unlock the working capital tied up in their unpaid invoices. Here’s how it works:

1. First you need to submit the required documentation and financial information, including the details of the unpaid invoices you wish to finance, as part of your application. 
2. Our lending team will assess your application and determine how much of the value of your invoice can be funded in advance (up to 80%). 
3. You will then receive the working capital with 24 hours of approval. 
4. Once your customers or clients have settled their accounts, you will receive the remaining balance less any applicable fees. 

Traditional business loans and overdraft facilities typically require real estate or assets as collateral, whereas Invoice Finance leverages your accounts receivables as security. This enables you to access cash quickly for goods and services you’ve already sold.

With Invoice Finance, you receive an immediate cash advance on your unpaid invoices, with a small percentage charged as a facility fee. Funds can often be provided in as little as 24 hours following approval.

Additionally, unlike business loans, Invoice Finance doesn’t involve fixed monthly repayments. You have complete control over how many invoices you submit for financing and when to submit them.

Invoice Finance offers greater flexibility compared to an unsecured business loan. While unsecured loans also don’t require collateral, they provide a lump sum upfront, which you repay over time with regular installments that include both the principal and interest.

With Invoice Finance, funding is available as and when you need it, without the need for scheduled repayments. You can finance invoices to address cash flow gaps, and repayment occurs automatically when your customer settles their invoice.

Invoice Finance is often easier to access compared to traditional business loans. Most loan providers require a long trading history and a strong credit rating. With ScotPac’s Invoice Finance solutions, the primary eligibility requirement is ensuring your customers can pay their invoices. Your accounts receivables serve as the security needed to access funding, making it a simpler and more straightforward option for many businesses.

With Invoice Finance, you can access funds quickly – often within just a day of submitting your invoices. This fast turnaround is particularly useful for addressing immediate cash flow gaps, such as paying wages, covering urgent expenses, or seizing unique and time-sensitive opportunities in the market. 

Yes, Invoice Finance (also known as Debtor Finance) can be an excellent option for growing start-ups or small businesses with at least 6 months of trading history. It helps improve cash flow management and supports sustainable long-term growth.

Unlike traditional loans and overdrafts, which often have strict lending criteria that can make them inaccessible for start-ups, Invoice Finance focuses on where your business is headed rather than how long it has been operating.

Speak to a ScotPac lending specialist today to receive tailored advice and explore which finance solution is the best fit for your business needs.

Invoice Factoring involves the ‘selling’ of a business’s invoices to a lender in exchange for a cash advance of up to a pre-agreed percentage of the invoice value upfront. The lender is then responsible for collecting the outstanding payments from customers, and once payment is received, the borrower receives the remaining balance minus fees. This option is suitable for small or medium-sized businesses without an in-house collections or accounts receivable department. 

Invoice Discounting, on the other hand, follows a similar process – however, the borrower (i.e., your business) retains responsibility and control over debt collection. The outstanding invoices are still used as collateral for a line of credit. This is ideal for businesses with established collection processes, a robust accounts receivable department, or those wanting to maintain confidentiality about the Invoice Finance arrangement. 

Yes, Invoice Factoring can be structured in two main ways: recourse and non-recourse factoring.

With recourse factoring, your business retains the risk of non-payment. If your customer is unable to pay the invoice, your business is responsible for covering the cost of the financing provided by the factoring company.

With non-recourse factoring, the factoring company assumes the risk. Once you sell the invoice to the lender and receive funding, the factoring company takes responsibility for collecting the debt. While this reduces the risk for your business, it increases the lender’s exposure, meaning fees for non-recourse factoring are generally higher.

With ScotPac, you can mitigate the risk of non-payment with Bad Debt Protection. This additional service protects your business cash flow in the event of customer non-payment.

It depends on the type of Invoice Finance facility you select.

With Invoice Factoring, your lender manages your accounts receivable and collections as a third party, meaning your customers will be aware of your arrangement with ScotPac.

If you prefer a confidential arrangement, Invoice Discounting allows you to retain control and responsibility over collecting payments.

Once your funding facility is established, we will provide your customers with the new bank account details. Depending on your facility type, this ‘Notice of Transfer’ can appear either on our letterhead or yours, ensuring confidentiality if required.

At ScotPac, we work proactively to mitigate this risk by conducting credit checks to help you avoid overextending with customers who may struggle to pay.

If invoice non-payment is a concern, you may want to consider adding Bad Debt Protection to your credit facility. This solution helps safeguard your working capital and provides added peace of mind.

Yes, ScotPac provides an easy-to-use online portal for managing your facility. Using the latest industry technology, you can quickly and conveniently upload outstanding invoices, view funding limits, and download reports as needed.

If you ever require assistance, our dedicated team is always here to support you.

An Invoice Finance facility is a type of business funding solution that uses outstanding customer invoices as collateral to provide access to a line of credit. It allows businesses to borrow the funds they need through a cash advance secured against unpaid invoices – delivering immediate working capital to meet operational needs or support growth. 

Businesses can use Invoice Finance to bridge cash flow gaps, ensuring they have the funds needed to maintain daily operations and support growth. Invoice Finance helps small and medium-sized businesses manage long payment delays from customers – without affecting their ability to pay suppliers, meet payroll, or seize new market opportunities.