Invoice finance — whether factoring or invoice discounting — and a Credicorp facility both provide working capital, but they work in fundamentally different ways. The right choice depends on where your cash-flow pressure sits.
How invoice finance works
Invoice finance advances a proportion of the face value of unpaid customer invoices, typically 70–90%. The lender takes an interest in your debtor book, and in the case of factoring, manages your collections. It is well-suited to businesses with strong recurring B2B sales but slow-paying customers. Fees include a service charge and a daily interest rate on the advance.
How Credicorp works instead
Credicorp does not require you to assign invoices or share your debtor book. A Business Loan advances a fixed sum to the company based on its trading profile and creditworthiness — you repay on a fixed schedule regardless of when your customers pay you. Credicorp Flex lets you draw and repay against a confirmed limit as your cash cycle moves. This suits companies whose working-capital need is not tied specifically to outstanding invoices.
Relationship with your customers
Disclosed factoring means your customers know a third party manages your sales ledger. Credicorp lending is entirely confidential — there is no contact with your customers, and no assignment of receivables. Directors also carry no personal liability: the facility is with the company.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: Credicorp vs a merchant cash advance, Credicorp vs a bank business loan.