What is invoice finance?

And how exactly does invoice finance work?

Put simply, invoice finance enables businesses to get paid for their outstanding invoices, giving them an instant cash injection, rather than waiting weeks or months for an invoice to be paid.

Invoice finance is an extremely powerful tool to optimise cash flow and fuel growth.

Below are 5 key benefits that invoice finance can bring to small businesses.



Invoice finance optimises cash flow

No business can afford to ignore its cash flow, but many overlook its importance, focussing more on the profit and loss (P&L) account. Cash flow is the money moving in and out of your business over a given period of time and represents your overall financial health. It offers more stability, control and power than any other asset you have in your business.

When it comes to cash inflow from invoices, most businesses are subject to payment terms and the occasionally unhelpful payment behaviour of your debtor. You may have clients that always pay on time, but the terms of your agreement mean that you have to wait the full 30, 60 or even 90 days for payment to reach your account. You may also have that client who regularly pays you a week or more late every month. While you might have come to expect it and can manage around this poor payment behaviour, it doesn’t get any less irritating or inconvenient.

Check out our cash flow blog post
Cash Flow Management with Hydr - Visual Waterfall

An invoice is an asset on your balance sheet that you cannot deploy until your debtor turns it into cash. The longer the payment terms, the harder it can be to manage your company’s cash position until the invoice is paid. Working with an invoice finance partner enables you to realise the value of that asset before it is paid by the debtor.

With Hydr, once you’ve raised your invoice, we will pay 100% of the value of your invoice, minus our fixed fee, in just 24 hours, giving you absolute certainty of cash flow and maximising the value of your asset. Hydr has the ability to reduce 90, 60 or 30-day payment terms to just 24 hours.


Invoice finance is a credible alternative to extending borrowing

When thinking about access to cash, most companies look at borrowing. This can be through an overdraft, asset finance, mortgage or a credit card – many of which will take time to apply for, are subject to rigid agreements and long commitments and are pretty expensive with high annual percentage rates (APR). They may not always be the right form of borrowing for your needs.

Rather than going deeper into debt, invoice finance enables you to release the assets on your balance sheet and turn them into cash. Sounds great, right? It has been around for a long time and it’s fair to say that some providers have been a little opaque in their pricing. Not only that, but the process of applying for invoice financing can be pretty laborious. This has impacted the perception of invoice finance over the years as something that is expensive and complicated, which is why it can be overlooked by some businesses, even though it’s the best solution for their needs.

We want to change this perception with transparent, fixed fees and a seamless, digital onboarding. If we are unable to support you, we’ll tell you within 15 minutes and you will not have had to submit lots of paperwork in order to enable us to do so.  If we can help, the fee we quote for your invoice is the price you’ll pay. No hidden extras, no subscription fees and even if your debtor is a few days behind making payment – our fee doesn’t change. It also includes credit insurance.

Hydr doesn’t lock you into a contract and you can choose to finance as many invoices as you would like, enabling you to switch on or off as you need to. Have a look at our handy calculator to give you a sense of our fees before you start onboarding.

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Apply Online - Simple Steps with Hydr


Invoice finance removes the burden of payment terms (and late payment)

Being in business can be a rollercoaster. The elation when winning a contract, the satisfaction of a completing a job well done and the pleasure of issuing the invoice.
Then, the wait to get paid…

You may start the month with optimism that your client might just behave differently this month and decide to pay you a little early. Alas, they never do. You experience that gut wrenching feeling of the invoice due date coming and going with no payment hitting your account.
Awkward chaser conversation looms…

The reality is that long payment terms and late payment induces stress, anxiety, frustration and forces you to waste time checking and chasing. Time you should be spending on your business and what you love doing. It’s why you got into business in the first place, right?!

There is a better way! Invoice finance removes the burden of waiting for and chasing for payment. You have the money in your account within 24 hours of raising your invoice allowing you to focus on your business and plan with confidence.


Invoice finance relieves you of awkward payment chaser conversations

You went into business because you love what you do, not to chase payment for invoices. All small business owners have been there and it can be really uncomfortable. It’s pretty unpleasant starting a meeting talking about all the great work you are doing together, but meanwhile you know you have to bring up the late payment conversation at the end. You spend your time chasing the very people you are working hard to build meaningful business relationships with – it simply shouldn’t be like this.

This is where Hydr can help. We are experts in this space and take pride in building strong and professional relationships with your customers, always making sure you look great. We act as a genuine extension of your business and/or finance team and you should view us as such. The very fact that your customer knows that payments are being managed by a third party will positively change the dynamic of your meetings and may even improve their payment behaviour.

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Optimise Cash Flow with Hydr - Invoice Finance Provider


Invoice finance enables you to plan for the future

We started with the importance of cash flow and it’s where we end. Cash is king.

Ultimately the success and resilience of your business is inextricably linked to your ability to maintain healthy cash flow. No matter how many contracts you have in place and how many invoices you have on your balance sheet, if you run out of cash, that’s it.

With an invoice finance partner working side by side with you, you will have cash in the bank with highly predictable cash flows that facilitates stability and certainty, so that you can plan the future of your business with confidence.

As an experiment – just take a look at your cash flow budget for the next three months and put all payments in the day after the invoices are due to be issued. Now, take a look at your bank balance.

What invoice financing isn’t

Invoice finance is not admitting defeat, and it is not a sign of weakness. Our market research has shown that some business founders are concerned that their customers might view them differently if they decide to finance their invoices through a third party.

This is simply not the case – we passionately believe that invoice financing is a sign of ambition, confidence and strength. You want to spend your time on building your business and you need your hard earned cash in the bank as quickly as possible to fuel that growth.

With a partner like Hydr you are getting a first class digital and human experience for fees that are fixed, all-inclusive and competitive.