When late invoices and cashflow gaps are the problem, businesses often weigh two routes: invoice finance, which advances money against unpaid invoices, and a term facility like Credicorp's. Both ease cashflow, but they work in different ways and suit different situations.
How invoice finance works
Invoice finance is tied to your sales ledger. A provider advances a portion of each invoice's value, then collects or waits for the customer to pay. It scales with your invoicing, but it usually involves the provider being closely involved with your customer payments, and the funding rises and falls with your ledger.
How a term facility works
A Credicorp facility gives your company an agreed amount, repaid over an agreed term at the rate shown in your offer, independent of any single invoice. It is simpler to predict, not linked to specific customers, and you keep full control of your own collections.
Which suits you
- Invoice finance can suit businesses with a large, steady book of reliable trade debtors.
- A term facility can suit defined, time-limited needs and businesses that want to keep customer relationships in their own hands.
- Some businesses use a mix, depending on the situation.
There is no single right answer; it depends on how you trade. Credicorp lends only to UK limited companies and LLPs for business purposes, never to individuals or sole traders, and we take no personal guarantees. As an exempt lender we are outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply.
See also: Can business finance help bridge a short-term cashflow gap?, Using cashflow finance responsibly: a checklist and Credicorp Flex versus Credicorp Slice: which suits your borrowing?.