.png)
A Bank or an Independent Invoice Finance Lender – What Are the Differences?
- Tommy Hume
- Mar 19
- 3 min read
When looking for invoice finance, businesses have two primary choices: using a traditional bank or opting for an independent invoice finance provider. While both offer solutions to help bridge cashflow gaps, there are key differences between the two that can impact flexibility, service, and overall business support. So, which is the better fit for your business? Let’s explore the differences.
1. Speed and Flexibility
Banks, with their stringent policies and lengthy approval processes, often take longer to set up an invoice finance facility. Independent lenders, on the other hand, are typically more agile and can get businesses set up and funded much faster - sometimes within days. Afterall, it's their bread and butter.
Additionally, independent lenders often provide greater flexibility in structuring facilities. Banks may impose strict credit criteria and predefined terms, whereas independent lenders can tailor solutions to fit a company’s unique cashflow requirements.
2. Risk Appetite and Accessibility
Banks have a lower risk appetite and tend to lend to businesses with strong financial histories and excellent credit ratings. If your business has faced financial challenges or operates in a high-risk industry, getting approval from a bank can be a little more difficult.
Independent invoice finance lenders, however, often take a more commercial and practical view of lending. They assess the strength of your sales ledger rather than just focusing on your company’s credit history, making invoice finance more accessible to a wider range of businesses.
3. Relationship and Customer Service
Customer service can vary significantly between banks and independent lenders. With a bank, businesses often deal with a large institution where invoice finance is just one of many financial products. This can mean less personalised support and a more rigid approach to problem-solving.
Independent lenders specialise in invoice finance, meaning they are typically more focused on delivering a tailored and customer-centric service. Many offer dedicated account managers who understand the specific needs of your business and can provide ongoing support to help you maximise your cashflow.
4. Cost and Pricing Transparency
Banks may appear to offer lower fees at first glance, but their pricing structures can sometimes be more rigid, with hidden costs that add up over time. Independent lenders are often more transparent with their pricing and may provide more competitive rates depending on the size and nature of the facility. Additionally, independent lenders tend to offer more bespoke pricing, whereas banks usually take a one-size-fits-all approach.
5. Credit Control and Bad Debt Protection
If you opt for Invoice Factoring, where the lender manages credit control on your behalf, the quality of service matters. Banks often have centralised credit control teams that may not prioritise your customers in the way an independent lender would. Some businesses worry that using a bank’s invoice finance service may negatively impact customer relationships.
Independent invoice finance providers often have dedicated, exceptionally-run credit control teams who ensure that collections are managed professionally, minimising disputes and maintaining strong customer relationships. Many also offer bad debt protection options to safeguard your business from non-paying clients.
A Bank or an Independent Invoice Finance Lender - Which Option is Right for You?
Choosing between a bank and an independent invoice finance provider depends on what you prioritise most. If you’re looking for a well-established institution with broad financial products, a bank might be the way to go. However, if you need faster access to funds, greater flexibility, and a more personalised approach, an independent lender could be the better choice.
At 12s Finance, we help businesses like yours navigate these choices by ultimately matching you with the perfect invoice finance lender based on your needs. We ensure you get a facility that works for your business, with transparent pricing and the right level of support.
So whether you're looking for a bank or an independent invoice finance Lender, get in touch with 12s Finance today, and we’ll find the perfect lender for you.