For anyone who is considering using invoice fund (which includes both financing and invoice discounting services) you should read this article first as it summarises the last 5 years worth of research that we get conducted about the sector. Below I actually have distilled all the results into the key information that anyone considering using such products, needs to know. invoice financing services
Invoice financing is not employed by an enormous number of businesses within the UK, but it is employed extensively by fast growing businesses. All of us have estimated that about 0. 86% of all UK businesses currently use these products, compared with most businesses that will use some combo of overdraft, loan or family money to finance their venture. There are a number of reasons for this. Approximately 25% of businesses are likely to be eligible (higher if you include retailers for who there are now specialist funding products). Membership and enrollment is mostly linked to control of the company. Those which sell goods or services that are “sell and forget” are most matched, and the sales have to be to other businesses, on credit conditions. So if you considered that in, one might estimate the marketplace penetration to be around 4% of eligible businesses.
You will find two key reasons for the reduced number currently using these services. Awareness of these products is very low amidst UK companies. Our studies have repeatedly found that one of the real key issues for this sector is the fact businesses do not know about, or understand these products. The other reason is price. Businesses tend to expect that these services will be much more expensive than they actually are. Often they do not have access to the whole market so are unable to compare the deals that are available across the wide range of providers that provide this sector. Also, when deciding value for money, the benefits from services such as factoring, including outsourced invoice collections and credit control, needs to be factored in.
Turning to the fast growing businesses, we conducted a study that found 12% of businesses that were growing their turnover by 20%, or even more, per year, were using invoice fund. The concentration was even higher amidst those that said they cannot develop any faster than they were already. 52% of the people “maximum growth” companies informed our study that these were using these services. The reason behind this is that as the turnover of the company grows so the level of finance expands in line with the business.
We have researched new startups and found that just 2% were using these services. In most cases they either didn’t know about these products or assumed that new startups would not qualify, which is wrong. There are specialist services suitable for new start ups.
These are a few of our other key findings that contain arisen from studies of existing monthly bill finance users:
98% of existing users told all of us that they would recommend invoice finance.
On average an enterprise will use these products for 5. twenty eight years during which time they may normally change company once, in 42% of cases to improve on price.
The least expensive invoice funding company varies according to product and conditions of a particular possible consumer (we have studied this using mystery shopping techniques).
Customer satisfaction levels, relating to the independent research, tend to be 45% higher where a completely independent receivables financier can be used instead of a bank offering these services. Despite this, 51% of users that we selected, said they had found their way to these services through their loan company.
FundInvoice have had the opportunity to save 4 out of 5 businesses money on prices quoted elsewhere. Normally they have saved clients 37% of their account finance costs.
If you want to see the details of the resources and nature of the studies that lie at the rear of these findings they can all be found in the study section of our site.