5 Myths about Invoice Finance

Invoice finance has been around for about 4,000 years. Called Factoring or Invoice Discounting, it hadn’t changed much at all until recently.

But now with the global evolution of Confidential Invoice Trading, it is becoming a full-on 24/7 21st century engine of growth for those in the know. In the UK alone, over $2bn of trades have been completed and now it is growing at similar rates in Australia. However, many businesses are missing out on this simple and effective method of growth funding due to the myths that still exist around it.

Here are the top 5 invoice finance myths and how they compare to the facts:

Myth 1: “It must be expensive”

Facts: Probably the most common myth about invoice finance is that it must be expensive. When people hear about flexible and fast funding that they can use whenever they need to, the assumption is that it must come at a premium. And they’re probably right if they’re thinking it’s Factoring.

In actual fact, Confidential Invoice Trading is usually no more expensive than other forms of non-mortgage backed business finance like loans or overdrafts, can work out cheaper due to the shorter term nature of the funding and can provide much more finance when most needed. Also it is far cheaper than Equity, even if it could be raised.

Myth 2: “My customers will be chased for payment”

Facts: Another common myth about invoice finance is that the customers of the business will be contacted for payment and therefore would know that their debt has been ‘sold on’. For many businesses, this is unacceptable for good reasons. This is critical for ambitious businesses who have put so much into nurturing their customer relationships. We get that.

That is definitely how Factoring works and it's a problem. But not with Confidential Invoice Trading at InvoiceX. We do not contact your customers at any stage. In fact, the only time we would generally ever ask them for payment is if you were in default under your facility so, in the ordinary course, you keep full control of your customer relationships. 

Myth 3: “It’s only for businesses in trouble”

Facts: This couldn’t be more wrong at InvoiceX but again is certainly associated with Factoring. Our Confidential Invoice Trading product is a business funding solution that helps to provide cash flow for growing businesses in an easy and affordable way.

At InvoiceX, we have many success stories of customers whose businesses have gone from strength to strength with the help of our funding. Whether it’s preparing for a busy time of year or securing cash flow to take on new projects, Confidential Invoice Trading is an ideal solution for growing businesses.

Myth 4: “I’ll have to fund my whole sales ledger”

Facts: Many businesses just want the flexibility of funding only certain invoices. For example, if you’ve got a particular customer who demands longer payment terms, or regularly pays late you might only want to finance invoices for that customer. Why pay for finance that you don't need? We agree!

Whilst Factoring firms generally expect you to finance your whole ledger, if you choose a provider which offers Confidential Invoice Trading you’ll be able to benefit from the full flexibility of using the service as and when you need to.

Myth 5: “I’ll get locked into a long contract”

Facts: It’s all a matter of making sure that the service you choose is right for your business.

Most traditional invoice finance providers ask you to sign a long term contract which is difficult to escape from. However, at InvoiceX, we believe in providing the best funding option for your business.

Our Confidential Invoice Trading facility is a selective invoice discounting service which allows you to use it as and when you need to, and you only ever pay for the funding that you need. 

Our Fixed Term Working Capital Facility is a confidential invoice discounting service, designed for businesses with more regular funding needs and available on a 12 month subscription basis.