Using invoice finance as a business contingency fund

Invoice finance solutions release capital from unpaid customer invoices, improving business’ cash flow and reducing the need to chase late payments.

At Close Brothers, we offer a range of invoice finance solutions, including invoice discounting, invoice factoring and asset based lending. These are often used as a contingency fund for companies looking to ensure they have financial headroom in place.

Contingency funding

Invoice finance can provide a financial safety net for company as it releases up to 90% of the value of a business ledger up front.

For businesses partnered with Close Brothers Invoice Finance, this funding can be used as needed. If a business does not draw down on their available invoice discounting funding, they are only charged a minimum service fee.

The structure of our fees means that our funding is often a sustainable option, giving SMEs the transparency and flexibility to use their account as a contingency fund.

Being prepared

Having a contingency fund in place can help businesses cope with unexpected outflows or crises. This reserve can help to make a business more stable and enable reactive decisions during challenging periods.

In recent times, uncontrollable events such as COVID-19 and Brexit, have had a huge impact on day-to-day operations and world economics. The unpredicted circumstances these created for many businesses have put a renewed spotlight for having safeguards in place.

Similarly, internal changes or requirements can also put an unexpected strain on cash flow. For example, a company could need to purchase a large asset due to a breakdown or need to invest in stock due to a surge in demand.

Each business must develop its own financial strategy, including a contingency plan, which fits their budgets and operational structure. For B2B companies, invoice finance could provide a way to utilise unpaid customer invoices when needed.