Invoice finance: top 5 objections

Although invoice finance has grown in popularity considerably in recent years, and the product continues to evolve and develop, some age-old myths about it still exist today.

It's niche, and perceived as being far more complicated than conventional lending products, and as such a lot of misinformation and misunderstanding surrounds it.

Which arguably the industry has still not done enough to address.

I've come across most of them in my time and here, in no particular order, I address the most common:

'People will think my business is in trouble.'

Invoice Finance doesn't have the stigma attached to it that it once did - nowadays it's first resort, not last. Over 40,000 businesses in the UK, and thousands more worldwide, are using it for funding.

It's now widely acknowledged as a superior working capital solution for growing businesses, not failing ones.

'My customers won't like it and will stop buying from me.'

Thankfully, a myth that is phasing out as invoice finance becomes more mainstream.

Some of the largest firms in the UK, including many household names, have absolutely no issue with their suppliers using invoice finance.

And often the customers that kick up the biggest fuss are also the slowest at paying their bills.

But if disclosure really is an issue, the product can be provided confidentially (subject to status). Your customers will have no idea you are using invoice finance.

'I will lose control of my business.'

With hundreds, potentially thousands, of clients your funder does not have the time nor the inclination to run your business for you.

And the product can be as high-touch or low-touch as you want it to be; one of the most notable advancements of invoice finance in recent years is that it is no longer 'one size fits all'. An invoice discounting facility, for example, will allow you to retain complete control of your sales ledger and collections.

'You will lock me into a long term contract that I can never get out of.'

Short term contracts and notice periods are available, from as little as 28 days. Most funders also offer trial periods, usually of between 3 and 6 months. You don't have to sign up to a lengthy contract period.

However, reputable funders are committed to the principles of Treating Customers Fairly and will always endeavour to resolve any contractual issues amicably, regardless of term.

'It's too expensive.'

Compared with what?

The tendency is to compare invoice finance with a bank overdraft or a loan but that is like comparing apples and pears.

Invoice finance will always cost more than a traditional lending facility, but the cash flow benefits greatly outweigh them too. Quite often, it is the only option that will generate the funds required to support growth.

What is the cost of doing nothing?