Selling the Wait
Invoice finance converts a sixty-day wait into cash now, minus a fee. What it fixes, what it costs, and what it quietly changes.
Theirswho controls this stretch
Ways to close a sixty-day gap, and what each takes out
Ask, at the quoting stage
Costs you: A negotiation, and occasionally the job
Put it in the quote
Costs you: Three invoices where there was one
Ask the person who wants the work
Costs you: Usually refused, at no cost
Sign an agreement and pay the charge
Costs you: A share of every invoice, and a contract harder to leave than to enter
The three free moves all happen before the work; the paid one is what is left afterwards. One supplier's own list, not advice about financing.
Invoice finance converts a long wait into cash now, less a charge. It does not reduce the wait; it moves it onto somebody who is paid to carry it.
The delay in “Selling the Wait” needs separate timestamps for work, approval, invoicing and settlement. Teams reviewing follow this first-party guide for online employee timesheets can strengthen the work-record part of that chain without pretending to explain what happened inside the customer’s accounts-payable process.
For a supplier whose problem is timing rather than solvency, this is sometimes the right answer. It is expensive, and it changes how your customers experience you.
For an independent reference relevant to “Selling the Wait”, consult Equifax business-credit resources. Compare general information with the contract, jurisdiction, payment route and accounting records involved.
The two shapes
Discounting: you borrow against your invoice book and keep collecting yourself. Factoring: the financier takes over collection, and your customer deals with them.
The second is cheaper and more visible to your customers.
The charge, annualised
A service charge plus a discount rate on the advanced amount, which when annualised is considerably more than ordinary borrowing.
Comparing that to the cost of not having the cash is the only comparison that matters.
What it fixes
A business that is profitable on paper and short of cash because its customers pay in sixty days and its suppliers and staff do not wait that long.
This is the most common reason small suppliers fail, and it is not the same as being unprofitable.
What it does not fix
Customers who do not pay at all. Most arrangements are with recourse: if the invoice goes unpaid, it comes back to you, often with charges.
Read which invoices are eligible and what happens to the ones that are not.
What it changes
Your customers may now receive collection letters from a finance company. Some buyers read that as a sign of supplier distress.
Whether that matters depends entirely on the relationship.
The concentration problem
Financiers dislike books where one customer is most of the balance, and they may decline or price it accordingly.
The same concentration is a risk to you; their pricing is simply telling you so.
What they look at
Your customers' creditworthiness more than your own, because the customers are the ones paying.
A supplier with weak accounts and strong customers can often get this when it cannot get a loan.
The alternative that costs nothing
Shorter terms, deposits, and stage payments — in other words, everything in the first half of this collection.
Invoice finance is what you buy when those were not negotiated.
Reading the agreement
Minimum terms, minimum volumes, exit fees and notice periods. These arrangements are often harder to leave than to enter.
When it is the wrong answer
When the real problem is pricing, or a single customer who will never pay, or a cost base too large for the revenue.
Financing a structural problem makes it arrive later and larger.
What problem it is the answer to
Invoice finance addresses one condition precisely: a profitable business whose customers pay in sixty days and whose staff, suppliers and tax obligations do not wait that long.
That gap is the commonest reason small suppliers fail, and it is not the same as being unprofitable. A business can be winning work, pricing correctly and growing, and still run out of money because growth increases the amount tied up in unpaid invoices faster than it increases the cash coming in.
Financing the gap converts a timing problem into a cost. Whether that cost is worth paying is an arithmetic question with an answer specific to one set of numbers — which is also why nothing here is advice about taking it.
Where it goes wrong
Two failures recur, and both are about using it for something it does not fix.
The first is financing a structural problem. If the real difficulty is pricing, or a cost base too large for the revenue, advancing receivables delays the consequence and enlarges it, because the charge is now part of the cost base too.
The second is treating it as protection against non-payment. Most arrangements are with recourse: an invoice that goes unpaid returns to the supplier, often with charges attached, which means the customer risk never actually moved.
There is a third, quieter one. These agreements frequently carry minimum terms, minimum volumes, notice periods and exit fees, and are considerably harder to leave than to enter. A supplier who takes it to cover one difficult quarter can find it is still there three years later, as a permanent deduction from every invoice the business raises.
Who should decide
Somebody who can read the total annual cost against the alternative, in your actual numbers. Nothing here is advice about whether to take it; the terms, the regulation and the tax treatment differ by place and are questions for somebody qualified.