Decision guide

Which cash flow finance
fits your problem?

Match the finance to the cause of the gap. If customers pay you on 30 to 90 day terms, look at invoice finance. If your spending comes in lumps you cannot predict, a credit line. If most of your income arrives by card, revenue-based finance. For a single project with a known cost, a loan. For a VAT or corporation tax bill, ask HMRC about Time to Pay first, then consider tax bill finance.

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Start from the situation

Find the line that sounds most like your business. The middle column is where to look first, not the only answer.

If this sounds like youLook first atBecause

Customers pay invoices on 30, 60 or 90 daysInvoice financeThe money is already earned; the finance grows with your sales ledger

Spending lands in lumps you cannot timeA credit lineYou draw when the bill arrives and pay only while it is out

Most takings come through a card machineRevenue-based financeRepayment shrinks in a quiet month instead of staying fixed

One project with a known priceA term loanA fixed sum, a fixed term and the lowest cost per pound for long money

A VAT, PAYE or corporation tax billHMRC first, then tax bill financeTime to Pay is often cheaper; borrowing buys certainty

A machine or vehicleAsset finance, through our sister firm CW Asset FinanceThe asset secures the deal, so it costs less than unsecured money

None of these is exclusive. Plenty of businesses run two side by side, and the section below covers when that works.

When customers pay on long terms

This is the most common cash flow problem we see and the one with the clearest answer. If you sell to other businesses on credit and wait 30, 60 or 90 days to be paid, the gap is not a lack of money but a delay in receiving it. Invoice finance closes that delay by advancing most of each invoice when you raise it, and because the facility is sized on your ledger it grows as you win more work, which a loan does not.

Choose between factoring, where the provider chases your customers, and confidential discounting, where you keep credit control and your customers need never know. The second is cheaper and wants a tidier ledger. The difference, priced. A credit line can do the same job for a smaller business, or for one whose customers are slow only some of the time.

When spending comes in lumps

Stock for a big order, a quarterly supplier bill, a repair nobody planned for. If the need is irregular and short, paying interest on a lump sum for a year is waste. A revolving credit line sits at nil cost on the facility we place most often until you draw, and refills as you repay, so the same limit covers the next lump too. What a year of that costs.

When takings come by card

Cafes, restaurants, salons and shops often have strong daily takings and thin filed accounts. Revenue-based finance is sized on the card receipts and repaid as a share of them, so a slow week takes less. It costs more per pound than a loan and suits uneven trade best; with steady takings, a loan is usually cheaper. How the factor rate works out.

When it is a single project, or a tax bill

A fit-out, a new hire’s first months, a website rebuild: one cost, known in advance, paid off over a year or more. A term loan is the plainest and usually the cheapest tool for that, and the term should match how long the project takes to pay for itself. How to get one.

A tax bill is its own case because the deadline is fixed and the penalties are not. Ring HMRC about a Time to Pay arrangement first; it is often cheaper than borrowing. If it is refused, or you need the certainty before the date, borrowing to spread the bill is ordinary working capital.

When finance is not the answer

All of these solve timing. None of them solves a business that spends more than it earns over a full year. If the gap returns every month and grows, borrowing postpones the problem and adds a cost to it. Look at prices, payment terms and overheads first, and talk to your accountant. We would rather say that than arrange a facility that makes things worse.

Not sure which line you are on? Tell us what the gap is and we will say which option fits.

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FAQ

Common questions

Which cash flow finance is best for a business that invoices clients on long payment terms?

Usually invoice finance, because it advances most of each invoice as soon as it is raised and the facility grows with your sales ledger. Confidential invoice discounting keeps your customers out of it. A credit line can work instead if the business is small or the slow payers are occasional.

Can I run a credit line and invoice finance together?

Often, yes, but the order matters. An invoice finance provider normally takes security over the debts it funds, and other lenders will see that. Arrange the invoice facility first and tell any later lender about it, or one may block the other.

Which type of cash flow finance is quickest to arrange?

Revenue-based finance and credit lines are usually the fastest, with decisions in minutes to a day for many businesses. Invoice finance takes longer because the provider reviews your ledger and customers before it funds.

Is cash flow finance the same as working capital finance?

Broadly, yes. Both mean money to cover the running costs of the business between paying out and being paid. The terms are used interchangeably; what matters is the product underneath.

What if my business is losing money, not just waiting for it?

Then cash flow finance is the wrong tool. It bridges a timing gap; it does not fund a loss. Most lenders will see a loss-making pattern in the bank statements anyway, and the kinder advice is to fix the margin first.

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