Invoice Finance – the truth

Mention the words Factoring or Invoice Discounting and many a business owner has been known to cower into the corner. The very thought of considering either form to inject some cash into the business fills them with doubt and apprehension.

But, is this ‘stigma’ just? Are the common misconceptions about factoring and invoice discounting still rife set against today’s economic backdrop?

Unfortunately yes, or should that be: mistakenly yes?

So let’s have a look at the most common misconceptions and why they are wrong.

Misconception 1: The Business is in Trouble

Many businesses still believe that these completely viable and appropriate forms of raising capital may give the wrong impression; they think it shows a sign that the business is in trouble.

The truth though, is that if your business is looking to expand or grow, Invoice Factoring is ideal. As business owners and operators, we know how difficult it can be to acquire outside funding. Factoring companies wouldn’t want a business in trouble and will only work with those they believe in, those who have a strategy for the business that looks positive and viable.

Misconception 2: Customers will Leave

Another misconception is business owners thinking that if their customers realise they’re factoring, they will leave! But factoring means that your business will have the support of a financial institution – what better way to say your business is poised for growth and has the potential to be successful?

Most Factoring Companies are well aware of the misconceptions, and an increasing number of them provide a service whereby they give the impression that all the communications are from you.

The truth: Invoice Finance is used for Growth

So contrary to popular myth, most businesses use a factoring facility to expand their business, not just to survive. It really has become a viable, alternative source of funding to repair cash-flow issues and fund expansion and growth plans.

It’s also worth mentioning that factoring can be used for financing the types of businesses that banks won’t touch, the building industry for example.

Invoice discounting

Invoice discounting is similar in terms of using your accounts receivable as collateral, and you keep the responsibility of collecting the monies and no-one outside the business need know of your financial arrangements.

How else can you raise Cash?

How else can you raise the cash? Take out a business loan, increase the limit of an overdraft or credit card? In the current climate, securing any of these would be a rarity and the risk attached would no doubt fall against some form of security.

How can we help?

I hope that this article has given you a more positive view of Factoring and Invoice Discounting. If you want to find out how it could help your business, why not contact us for a completely free, no obligation assessment call. We can give you advice on which companies to use and how it could work for your company.

Call us on 0845-6385256 or email

Do you suspect fraud?

Download our FREE guide with the essential do's and don't's.


Just fill out your details and we'll email it to your inbox immediately

Check your inbox!

Can't fund a client?

Get our FREE guide and find out how you can improve the ledger profile and associated systems and processes to make them fundable


Just fill in your details and we will email it to you immediately.

Check your inbox!