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What is Contract Finance?

Understanding contract finance for UK companies

Contract finance is a funding solution where businesses secure financing against the value of specific contracts or projects. It provides upfront cash to cover costs like labour, materials, or other expenses associated with fulfilling contractual obligations. This ensures smoother operations and prevents cash flow problems during project execution.

Did you know your unpaid invoices can be used to secure funding?

Get an invoice finance quote online or call us on the freephone number below to have a chat with one of our business cash flow experts.

Get a quote online 0808 250 0859

What is contract finance?

Contract finance is for companies needing to unlock capital tied up in secured contracts, but lack the necessary funds in order to fulfill it. A contract finance provider will typically advance up to 90% of the invoice value, with the remainder, minus the financiers fees, paid when the customer settles the invoice.

Key benefits of contract financing:

  • Improved cash flow: By receiving funds upfront, businesses can manage their cash flow more effectively.
  • Enhanced business growth: With more consistent cash flow, companies can invest in new projects and resources.
  • Credit management: Some contract finance providers offer credit management services, helping businesses chase up unpaid invoices.

Eligibility and application process

Criteria for eligibility

Business type:

Primarily aimed at B2B companies.

Creditworthiness:

Based on the creditworthiness of the client's customers.

Invoice requirements:

Invoices must be for completed work or delivered goods.

Application steps

1. Initial consultation

Discussing specific needs with the finance provider.

2. Documentation submission

Providing relevant financial documents.

3. Approval and setup

Subject to credit checks and due diligence.

Comparing contract finance with other financial solutions

Traditional bank loans

  • Collateral requirements: Usually require physical assets as collateral.
  • Flexibility: Less flexible in terms of amount and repayment.

Overdrafts

  • Limitations: Typically offer lower funding limits.
  • Cost: Can be more expensive due to higher interest rates.

Case study: success through contract finances

A UK-based IT services company faced challenges in managing its cash flow due to delayed payments from clients. By opting for contract finance, the company was able to access 85% of its invoice values upfront.

This immediate cash flow boost allowed them to take on additional projects, leading to a 30% increase in annual revenue.

What are the future trends in contract finance?

Technological advancements

Innovations in fintech are streamlining the process, making it faster and more user-friendly.

Global expansion

As international trade grows, the demand for contract finance is increasing globally, offering more opportunities for businesses to expand.

Have you ever thought about invoice finance to help improve your cash flow?

Invoice finance allows you to release cash quickly from your unpaid invoices.

As your lender, we can release up to 90% of your invoices within 24 hours. On payment of the invoice from your customers, we will then release the final amount minus any fees and charges. There are different types of invoice financing options available to businesses depending on the situation and the level of control they require in collecting unpaid invoices.

We are an invoice financing company who offer a solution whereby payments are collected on your behalf managed by our team of expert credit controllers so you can focus on running your business. Our confidential invoice discounting solution is offered to businesses who want to maintain their own credit control processes, therefore this remains strictly confidential so your customers are unaware of our involvement.

Get in touch

Contact our friendly UK advisors on our freephone

0808 250 0859

8:45 - 17:15 - Monday to Thursday &
8:45 - 16:45 - Friday

The benefits of invoice finance companies such as Novuna Business cash flow

  • Boost your cash flow without having to wait up to 120 days for your customers to pay you

  • Release up to 90% of the invoice straight away, and the final 10% when the invoice is settled

  • Access funds within 24 hours from initial appointment with our revolutionary digital onboarding process

  • Benefit from our in-house credit control processes, allowing you to focus on running your business, instead of chasing clients for payment

  • Six month trial period followed by a rolling contract

Want to understand more cash flow finance terms?

Our Cash Flow Finance Resource Hub has been set up to help SME's with cash flow finance advice, tips and resources to help with their cash flow position.

We explore ways you can begin improving your cash flow situation and start getting your business on track to positive cash flow.

Quickly get the right invoice finance solution for your business, simply fill out the requirements below to get your quote:

We'll compare the best invoice financing products available to get you the best deal.

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