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Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

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Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

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More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Introduction to Invoice Finance

Introduction to Invoice Finance

Mark Thompson

15 years: Invoice finance

Invoice finance is a collective term for the various types of receivable-based lending whereby a company uses their invoices as the principal security and collateral for funding. Mark expands on invoice finance and covers who is involved in the structure, why it exists and how it works.

Invoice finance is a collective term for the various types of receivable-based lending whereby a company uses their invoices as the principal security and collateral for funding. Mark expands on invoice finance and covers who is involved in the structure, why it exists and how it works.

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Introduction to Invoice Finance

8 mins 43 secs

Overview

Invoice finance is the collective term for various types of receivable based lending where a company uses their invoices as the principal security and collateral for funding. Invoice finance in the UK is a £20bn plus day-to-day funding market.

Key learning objectives:

  • Define Invoice finance and a Debenture

  • Discuss the parties involved and how IF works

  • Explain the benefits to each party and how financiers are paid

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Summary

Who is involved in an IF structure?

  1. Invoice financier
  2. The business who sells the receivable
  3. The debtor

Who are the main invoice financiers?

  1. Banks
  2. Independent financiers
  3. Private equity firms

What are the benefits of using invoice finance?

  • Creates liquidity and supports cash flow by allowing faster access to funds from outstanding invoices
  • Highly flexible form of finance, especially compared against other forms of borrowing

How does invoice finance work?

Firstly, the business provides the product to their customer (the debtor) and sends an invoice to them on agreed payment terms for a time in the future. The business then sends the invoice details to the invoice finance provider.

Following this, the financier then arranges for a percentage of the invoice to be made available. The debtor then pays the financier the full value. Finally, when the debtor pays, the remainder of the invoiced amount is paid to the borrower, less a service fee.

What is a Debenture?

This is a charge registered against the assets, on a limited entity or in the case of others, lending a waiver of their security over the company’s book debts.

Why do financiers like invoice finance?

  • Low risk
  • Lower cost of capital
  • Diversified risk
  • Tend to be structured to provide greater funding

In what ways do financiers receive returns?

Service Charge – The cost of having the facility in place and is either calculated as a fixed monthly charge or annual charge or a percentage of the turnover running through the account.

Discount margin – The percentage normally charged over base or Libor for the amount used when the funding is made available.

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Mark Thompson

Mark Thompson

Mark has spent most of his career within receivable finance working in some of the UK’s largest asset based lending, receivable and invoice finance businesses. Mark has recently transferred this experience into private equity and is now in the world of invoice finance fintech.

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