By Paul Morgan, MD of Able Commercial Finance
When I first started out in business, I was under the impression that borrowing money was a last resort – something you did only when the chips were down. But the truth is that smart businesses use finance all the time, not because they’re failing, but because they’re growing.
One of the biggest game-changers I’ve seen in recent years is the rise in popularity, and in my view, the overdue respect for invoice finance. It’s not flashy, it’s not particularly well understood, but used properly, it can be one of the most powerful tools a business has for unlocking growth.
Let me explain.
The problem with waiting to get paid
You’ve done the work, your team’s delivered the goods, and the invoice has been raised, and now… you wait. In some cases, for 30, 60, even 90 days. Meanwhile, you’re still paying staff, covering rent, buying materials, and dealing with suppliers who want paying yesterday. That’s a broken system, especially when cash flow is the lifeblood of any business.
Invoice finance changes the story. Instead of waiting for your customer to pay, a lender gives you a percentage of the invoice value up front, typically within 24 to 48 hours. You get the cash to keep moving, and when the client pays the invoice, the lender takes their share and passes the rest back to you.
It’s simple and sensible, and in some cases, it’s a lifeline.
Growth requires fuel
The irony, and I’ve seen it many times, is when a business gets a huge new order, they need more materials, more people – more everything to fulfil that order. It all costs money and if that money is tied up in unpaid invoices, that golden opportunity may become a problem.
Invoice finance can bridge that gap – it’s not a loan in the traditional sense because you’re not racking up debt in the hope that something will come in later. It’s funding against sales you’ve already made. The risk is lower, and the cost is often far less than you’d think. Best of all is it grows with you – the more you invoice, the more funding you can access.
The risks?
Yes, there are fees involved, and no, not every business or lender is created equal. But a good commercial finance broker, like Able, can help you find the right fit. Some facilities are ‘disclosed’, meaning your customer knows you’re using invoice finance. Others are ‘confidential’, so they’re none the wiser. Some lenders include credit control services to chase invoices for you, while others leave that to you. We help businesses understand the pros and cons of each setup.
One of the biggest misconceptions is that using invoice finance means your business is in trouble. That couldn’t be further from the truth – in fact, some of the most successful businesses I work with use it as a strategic tool to level out seasonal cash flow, to invest in staff or stock, or to fund expansion without giving away equity or taking on long-term debt.
Business owners didn’t start their companies to spend hours on the phone chasing invoices. Yet so many do, because they have to. It eats into time that could be spent on growth, customer service, or even (dare I say it) a bit of rest.
Invoice finance can take that burden off your plate, and the lenders often have professional credit control teams. They know how to chase a payment while maintaining your customer relationships. And that, in itself, is worth its weight in gold.
Not every business is a fit. But if you’re invoicing other businesses on standard payment terms, have decent credit control, and want to get your hands on your cash faster, there’s a good chance invoice finance could work for you.
We often work with clients who are surprised by how flexible and tailored it can be. You don’t need to finance every invoice. You can pick and choose. And if you’ve already got a facility in place, we can benchmark it against the market and potentially save you money, or unlock more funding.
In my view, invoice finance shouldn’t be seen as a last resort, it should be on the table from day one as a viable, smart option for managing cash flow and fuelling growth.
At Able, we’re not here to sell you a product – we’re here to help you understand the landscape and make the best decision for your business. We work with many funders and take the time to get to know what’s important to you, not just what looks good on paper.
So if your cash is tied up in invoices, and you’re ready to make your money work harder, give us a shout. It might just be the smartest move you make this year.
