Working Capital Solutions for UK SME’s

If you invoice other businesses and wait weeks to get paid, you already understand the issue. You've done the work, sent the invoice, and now you're waiting. Meanwhile payroll, suppliers and HMRC all still need paying on time.

You're not alone in this. Nearly half of all invoices to UK small businesses are now paid late, and on average businesses wait around 27 days beyond their terms before the money arrives, according to research published by Sage in June 2026. Late payment is estimated to cost the UK economy roughly £11 billion a year.

Here's the part that catches people out: a business can be profitable and still run short of cash. Profit on paper doesn't pay wages. If the money you're owed is sitting in someone else's account, it can't cover yours.

Isn't the government sorting this out?

Up to a point. A new Bill going through Parliament, the Commercial Payments Bill, aims to force larger companies to pay smaller suppliers on time. It proposes a cap on payment terms, mandatory interest on late payments, and a ban on retention payments in construction contracts.

It's a welcome step. But it's early, the detail isn't finalised, and some measures carry a long transition period. None of it helps a business waiting on an overdue invoice this month. Which brings us to what you can actually do now.

How invoice finance closes the gap

Invoice finance lets you access the cash tied up in your unpaid invoices, rather than waiting for customers to pay.

In simple terms:

✔ You raise an invoice and send it to your funder

✔ You receive a large percentage of its value, often within 24 hours

✔ When your customer pays, the balance is released to you, minus the funder's fee

It isn't a loan, so there's no fixed lump sum to repay. The funding line grows as your turnover grows, which makes it well suited to businesses that are scaling rather than just plugging a hole.

There are two main types:

Factoring includes a credit control service. The funder manages your sales ledger and chases payment for you. Useful if you'd rather hand that job over.

Invoice discounting is confidential. Your customers don't know a funder is involved, and you keep control of your own credit control. This tends to suit more established businesses with solid processes in place.

Which businesses does it suit?

Invoice finance works best for B2B businesses invoicing other businesses on credit terms. It's especially common in:

✔ Recruitment, where agencies pay staff weekly but wait weeks to be paid by clients

✔ Construction, where long payment terms and retentions stretch cash flow (construction finance is a form of invoice finance built around the sector's contracts)

✔ Manufacturing, wholesale and logistics, where the gap between paying suppliers and getting paid can be significant

If that sounds like your business, it's worth understanding your options before cash flow gets tight, not after.

Why use a broker rather than going direct

There are close to a hundred invoice finance lenders in the UK. Going direct means picking one and hoping it fits. A broker looks across the whole market to find the right structure, terms and lender for your specific situation.

It's worth knowing that for most lenders, using a broker doesn't cost you more. Broker commission is treated as a marketing cost by the lender, so the price to you is generally the same as if you'd approached them yourself. What you gain is someone who knows the market, handles the process, and stays involved if things change down the line.

Talk to a local invoice finance broker

Redwood Business Finance is a commercial finance brokerage based in Bournemouth, working with business owners across Dorset, the South Coast and the wider UK. We specialise in invoice finance and search the whole market to find the right fit for your business.

If your invoices are taking too long to turn into cash, let's have a conversation. There's no charge for a chat and no obligation to go ahead.

James Bingham Redwood Business Finance Suite 3e, Pine Court Business Centre, 36 Gervis Road, Bournemouth, Dorset BH1 3DH