Can a new courier company get invoice finance? Yes, and here’s how one newly established courier business secured a £40,000 facility after nearly choosing the wrong funding path.

The First Challenge: A £30,000 Overdraft Offer

A newly established courier company approached Wise Factoring looking for funding to support its growing business. With several vans on the road and customers paying on credit terms, cash flow was becoming increasingly important.

We found a suitable £40,000 invoice finance facility, but just as things were progressing, the owner received an offer of a £30,000 overdraft from his bank. He decided to take the overdraft instead and thanked us for our help.

But we had serious concerns that the overdraft wasn’t the right funding solution for his business.

With five or six vans on the road, the running costs alone could quickly swallow a £30,000 overdraft. Invoice finance worked differently. Rather than drawing down from a fixed pot, the business could release cash against its unpaid invoices, and the facility could be reviewed upward as the business grew.

There was also the question of what would happen if a customer didn’t pay. An overdraft offers no protection against that. The invoice finance facility included credit insurance, which meant that if an approved customer became insolvent, the business wouldn’t necessarily lose everything it was owed. In one case, a customer’s standard credit assessment came in at just £500, but through the specialist insurance arrangements available with the facility, the proposed cover was significantly higher. That kind of protection simply isn’t available with an overdraft. A separate credit insurance policy would have to be sought.

We also highlighted the importance of comparing the personal guarantees and security obligations attached to both options, rather than looking at the borrowing limits alone. And while a bank overdraft can be reviewed or withdrawn under its terms, a contractual invoice finance facility offered a different level of predictability.

Our guidance wasn’t about winning a deal. We genuinely believed he needed to consider the longer-term implications before making his decision. The client was always free to choose the overdraft, but we wanted to make sure that decision was fully informed.

Ultimately, our client agreed and decided to proceed with invoice finance.

The Second Challenge: A Debenture Problem

Just when we started finalising the facility, another problem appeared.

An existing commercial agreement created complications with the debenture (a form of security over company assets) required by the invoice finance provider. In simple terms, the agreement’s conditions meant the provider couldn’t take the security it needed over the company’s assets. It looked as though the deal could be stopped in its tracks.

But we weren’t ready to give up.

Working closely with the client and the funder, we explored a different approach. The solution was to establish a separate limited company for the client’s eligible private-contract work, keeping it distinct from the existing business arrangements. This wasn’t a workaround. It was a lender-approved structure that allowed the funder to assess the new company’s receivables and take the security it required.

We helped the client set up the new company, coordinated a revised proposal, arranged credit insurance and worked with the funder through the documentation and underwriting requirements. When further questions arose during the process, we stayed involved and helped keep the transaction moving.

The new structure was approved, and the facility could finally go ahead.

The Result

The client secured his invoice finance facility, and the funder released substantial funds against the company’s invoices. Instead of a fixed £30,000 overdraft that could have been exhausted within weeks, the business now had a funding line designed to grow alongside its invoicing, with bad debt protection built in.

Two obstacles. One broker who genuinely cared about getting it right. A £40,000 facility successfully arranged.

More Than Just Finding a Funder

We will push back if we believe a client is choosing the wrong funding path for their business. This client nearly chose a £30,000 overdraft. Because we kept the conversation going and worked through a security complication that could have ended the deal, he secured a £40,000 invoice finance facility with credit insurance protection instead.

If you’re starting or growing a courier business and need help with cash flow, we’d be delighted to have a chat.

Call 02921 900000 or visit www.wisefactoring.co.uk

Client details anonymised for confidentiality. All funding is subject to approval and terms. Credit insurance is subject to policy conditions.