Your business is thriving, with orders flying off your warehouse shelves. Your recent marketing campaign worked, and your new products are a big hit. But despite the booming sales, your cash flow is more like a trickle.
Every time sales come in, it feels like the money goes directly to paying off ad campaigns or suppliers, meaning your cash is always tied up. This scenario isn't just frustrating; it's a growth bottleneck many businesses face.
Enter invoice financing, which can help you bridge the cash-flow gap and keep your business on its upward trajectory.
In this article, we answer the following questions to help you better understand invoice financing and how it can help you grow your business:
Invoice financing allows you to access funds immediately based on the value of outstanding invoices, bypassing the typical wait for customer payments. This model not only improves liquidity but also means you can reinvest in growth initiatives immediately, without having to wait for cash from accounts receivable to come in.
So imagine you sell furniture, offering your customers flexible payment options as you know that many of them can’t pay for a full dining set up front. When your customer makes a purchase, you can leverage that invoice to access cash immediately from a lending institution. Then, you either pay that money back when the customer pays you, or the customer directly pays the invoice finance company you borrowed from.
Here are the steps for how the traditional invoice financing process works:
As you can see, this strategy allows you to improve cash flow without requiring customers to make full payments at the time of purchasing your products or services. For example, invoice financing can get you out of a position of negative working capital, meaning you can invest available cash in areas like inventory, marketing and development without having to wait for customer payments to come in.
There is another, less common approach to financing invoices, which has to do with getting access to capital for your accounts payable invoices, which we’ll delve into later on. Now, let’s take a look at the different types of invoice financing.
Invoice financing can be divided into a few different categories:
It may seem like an ideal situation—your customers get flexible payment options, and you get cash right away. But while there are definitely benefits to using invoice financing, there are also potential risks involved.
There are a number of reasons you would want to consider harnessing invoice financing, which include:
Of course there are some risks to using invoice financing. These include:
Pro tip from Juni CFO Ruben Arnbert:
“Focus on using credit where the opportunities are obvious—for example, scaling an already successful product or marketing strategy,” he says.
“Be wary of using credit for opportunities you are less certain of—for example, a growth project where you have little certainty of its success.”
He suggests that you should “always create a conservative/downside scenario to stress test what level of underperformance is required for you to have difficulties repaying the credit.”
Invoice financing can be an invaluable resource for businesses in specific situations, and understanding when to utilise this financial tool can help you make the most of it. A few examples of where it’s a good fit, according to Juni CFO Ruben Arnbert, include “if you have long sales cycles, a complex product offering or low inventory turnover (i.e. a situation where a lot of your capital is tied up on your balance sheet).”
He also recommends invoice financing in situations “where you have options to deploy capital more efficiently. For example, if one SKU is flying off the shelves or an ad on Meta is converting particularly well, using invoice financing will mean releasing cash earlier, which can be used to scale.”
Here are some other circumstances where invoice financing might be a smart choice:
For ecommerce businesses with seasonal sales patterns, invoice financing can help you manage inventory and operational costs ahead of peak seasons, ensuring you're fully stocked and ready to meet customer demand.
During periods of rapid growth, the need for additional inventory, marketing and staffing can strain your cash reserves. Invoice financing offers a quick solution to fund these growth initiatives without the lengthy approval processes associated with traditional loans.
If your business often finds itself waiting on payments for prolonged periods, leading to cash flow challenges, invoice financing can provide the immediate liquidity needed to continue operations without interruption.
“Invoice financing is a great fit for ecommerce companies or industries where capital needs to be deployed for an extended period of time until it can be converted into cash. Marketing and marketing agencies are also a good fit in order to scale successful campaigns.”
-Ruben Arnbert, CFO of Juni
New or small businesses might not qualify for traditional bank loans due to a lack of credit history or collateral. Invoice financing provides an alternative by leveraging outstanding invoices for capital.
If an unforeseen opportunity arises that requires quick financial action, such as a bulk purchase discount from suppliers or an unexpected market opportunity, invoice financing can offer the swift capital injection you need to take advantage of it.
Business owners looking to preserve ownership and avoid diluting equity might find invoice financing a preferable option. It allows access to funds without having to give up a stake in your business.
We’ve been talking a lot about the traditional approach to invoice financing throughout this article, in which a financing institution provides funds based on the value of outstanding invoices. But here at Juni, we take a different approach.
We offer customers capital for invoices, meaning they get access to funds to cover expenses, from Google Ads to inventory.
In other words, we give you access to financing from 10K, offering you up to 120 days to settle your invoices. With this approach, you can extend your runway, plus ensure you always pay your invoices on time—giving you the potential to negotiate better rates with your suppliers.
What’s more, Juni is a comprehensive platform with features like invoice and card automation to help you manage your finances and streamline payment flows.
Whether you’re facing seasonal sales cycles, managing rapid growth or simply looking to free up your cash flow, invoice financing offers a flexible solution for businesses who want to offer flexible payment terms to customers without being strapped for cash.
Yet, as with any financial decision, it's crucial to weigh the pros and cons. Invoice financing provides immediate benefits, but you need to understand its costs and implications. You also need to be clear on the different types of invoice financing and whether you’re financing customer invoices or receiving capital for accounts payable invoices.
As you consider integrating invoice financing into your strategy, remember it's one piece of the broader puzzle of managing your finances. Looking ahead and exploring comprehensive strategies for cash flow optimisation will help you build a resilient and thriving business.
*Juni Invoices is available for EU-based companies only. Media financing is available for companies registered in NL, SE, DE, FR, ES, IT, FI and NO, upon eligibility. Fees and terms and conditions apply. Click here for more details.
Invoice finance is a financial service that allows businesses to access funds tied up in unpaid invoices before their customers actually pay. By selling or borrowing against these outstanding invoices, companies can improve their cash flow immediately, rather than waiting for the usual payment cycles to complete.
Invoice financing is ideal for businesses that operate with delayed payment terms and require consistent cash flow to meet operational expenses. It's particularly useful for SMBs, startups and ecommerce platforms that experience rapid growth, seasonal sales fluctuations or have significant investment in inventory.
The cost of invoice financing varies depending on the provider, the volume of invoices and the risk associated with the transactions. Typically, fees can range from 1.5% to 5% of the invoice value per month. Factors that influence the cost include the financing company's service charges and the percentage of the invoice advanced, plus any additional fees for managing the sales ledger or collecting payments.
Juni is not a bank – yet. We’re a financial technology company providing e-money services and as such are not part of a deposit guarantee scheme. Learn more about our license and how we keep your business and money safe.
Juni Technology AB (company number 559248-0908) is licensed and registered as an electronic money institution with the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (license no: 64025). Payment Card Solutions (UK) Limited (company number 05941947) and UAB B4B Payments Europe (company number 305539054) are regulated by the Financial Conduct Authority (ref: 930619) and the Bank of Lithuania (licence no: 76), respectively. The Juni Mastercard Corporate Card is issued by Payment Card Solutions (UK) Limited and UAB B4B Payments Europe pursuant to a license by Mastercard International Incorporated. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Juni Technology AB. Masthamnsgatan 21, 413 28 Göteborg, Sweden. © 2025 Juni. All Rights Reserved.
