Eligibility requirements for invoice financing

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Written by Michael Foote , founder of Quote Goat, with over 13 years experience working in the finance, insurance and currency sectors.

The benefits of invoice financing cannot be understated to businesses that are looking to expand but are struggling with the common problem of unpaid invoices.

When they are able to take all those outstanding balances, transform them from figures on a spread sheet into money in the bank, they are in a much better position to deal with their day-to-day operations without the stress of no money coming and are able to expand into new avenues if they wish to do so.

When a business decides to apply for any type of loan, there are a number of factors that the lender will take into account before deciding whether a business is eligible for the loan. The same thing applies for those applying for invoice financing.

What are the requirements for invoice financing?

  1. Invoice financing is the lending of money against outstanding invoices so obviously your company must trade with other businesses, preferably several, and you must issue invoices for your goods or services.
  2. The credit terms that you offer within your invoices must meet industry guidelines.
  3. A business will usually have to prove that outstanding debts can be collected within a realistic timescale. For example, if a client has an outstanding invoice but has recently gone out of business, the lender will be unable to recuperate any of the outstanding balance if they decide to purchase it from you.
  4. Different lenders have minimum turnover requirements before they will consider purchasing invoices from them. A lot of the largest lenders will require a turnover of around £100,000 but there are some other, smaller lenders that will definitely consider SMEs and start-ups.
  5. Essential documents will need to be shown. These include a detailed list of customers, financial records, sales ledger, details of outstanding invoices, and sometimes a written guarantee from a company director will be necessary.

If you are unsure whether our business qualifies for invoice finance you can speak with your financial service provider before you search for a quote with us.

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