Invoice financing: the work is done, but still waiting to get paid?

Meanwhile, day-to-day business continues — wages need paying, materials need buying and the next order needs preparing. Profit on paper does not necessarily mean there is enough money in the account.

Invoice financing lets you access money for completed work or delivered goods sooner, without waiting for your customer's payment deadline.

What is invoice financing?

Invoice financing, also known as factoring, is a solution where a business assigns its receivable from a customer to a finance provider and receives funding against the issued invoice. The customer later pays the invoice to the finance provider under the agreed arrangements. The amount paid out and the settlement terms depend on the specific offer.

Put simply, the business can use money sooner that would otherwise remain tied up in a completed transaction until the invoice is paid.

It can be especially useful when:

• invoice payment is a month or more away;
• wages, fuel and materials need paying for today;
• seasonal activity increases the need for working capital;
• a new order is available, but funds are still tied up in the previous one.

Invoice financing can help maintain stable day-to-day operations and make new growth opportunities possible.

Practical examples

Construction: the next project starts before the previous one is paid

A construction company has completed and handed over its work, issuing an invoice for EUR 30,000 with a 60-day payment term.

A new project starts the following week, requiring materials and wages. By financing the approved invoice, the company can receive money sooner and use it to get the next project underway.

Benefit: a shorter gap between completed work and the next order.

Transport: every journey needs fuel

A transport company has completed deliveries and issued invoices totalling EUR 12,000. The customer will pay in 30 days, but fuel, road tolls and drivers' wages need paying regularly.

Invoice financing can help cover the costs of upcoming journeys while the company waits for payment for deliveries already completed.

Benefit: the company can keep fulfilling orders while payment for previous journeys is still outstanding.

Agriculture: the harvest is delivered, but the next season needs planning

A farm has delivered grain and issued an invoice for EUR 25,000 with a 30-day payment term.

Meanwhile, a supplier offers a better price on fertiliser if it is paid for immediately. By financing the approved invoice, the farm can access funds sooner and take advantage of this opportunity. Before deciding, the savings should be compared with the financing costs.

Benefit: an opportunity to prepare for the next season on time and reduce purchasing costs when the savings exceed the financing fee.

Forestry: the timber is delivered, but the machinery needs to keep working

A forestry company has delivered timber to a sawmill and issued an invoice for EUR 18,000 with a 45-day payment term.

While waiting for payment, it needs fuel, wages and repairs to forestry machinery. By financing the approved invoice, the company can direct funds towards these expenses and continue work at the next harvesting site.

Benefit: a lower risk of machinery downtime and the ability to keep working without waiting for payment for the previous delivery.

When is invoice financing worth considering?

For day-to-day financial management, the key question is: would receiving the money sooner help cover the company's expenses on time?

When thinking about growth, the question is different: what could the company earn if it could use this money now?

What should you know before applying?

Scandipay assesses invoices and delivery notes from EUR 1,000 for completed, verifiable transactions. Both the customer's ability to pay and whether the goods or services have been accepted without dispute are important.

How does it work at Scandipay?

1. You submit an invoice or delivery note for goods delivered or a service completed.
2. We assess the customer and the transaction, including contacting the customer to confirm that the transaction took place.
3. Once the transaction is approved, you receive the money — funding may be available within one business day.
4. The customer pays the invoice to Scandipay in line with the agreement.

Who is invoice financing suitable for?

It may suit businesses that sell goods or provide services to other businesses on deferred payment terms while paying their own expenses sooner.

Send your invoice or delivery note to Scandipay. We will assess the transaction and explain the offer so you can make an informed decision.