You’ve launched the business and the first orders are coming in. You’ve quoted, you’ve won, and you’ve shaken hands. Now you’ve got to pay the wages, buy the materials, and deliver the work, and the customer who owes you for the job is on 60-day terms.
This is the cashflow challenge most new-start businesses run into within their first six months. You’re not losing money, you’re winning, but every win locks more cash up in unpaid invoices, and at some point, you run out of road. Wages still need paying, suppliers still want their money, HMRC has its hand out, and the customer who owes you forty thousand pounds will take another six weeks to send it.
Invoice finance is built for exactly this situation, and the question for new-start businesses is finding a provider whose model is designed around your stage of the journey.
Why new-start funding is different
Most invoice finance providers are set up to fund established businesses, and the standard criteria reflect that: two years of accounts, a homeowner director, and a few household-name customers on the ledger. If your business is less than 12 months old, the conversation often ends quickly.
The standard criteria works well for businesses with several years of trading history behind them, and most providers are optimised for that market, but it does leave a meaningful gap for founders in their first year who have strong customers and real growth potential without the accounts to match.
This is the gap Team Factors is built for. New-start funding is one of the three areas we specialise in, alongside recruitment and health and social care, and we’ve spent years building a funding model that works for businesses in their first six months.
The rest of this article walks through how invoice finance works, why it suits new-starts, and what to look for when choosing a provider.
How invoice finance works
The concept is straightforward enough. You raise an invoice, the funder advances you most of the value (typically 80-90%) within days, and when your customer pays you receive the balance, minus a fee.
You’re not borrowing money against your business. You’re being paid for work you’ve already completed, just earlier than your customer would otherwise pay it.
There are two main types worth knowing about. Factoring is where the funder also chases your customers for payment, with a dedicated credit control team handling collections and your customers knowing the facility is in place. Discounting is where you keep collections in-house and your customers never find out.
For most new-start businesses, factoring is the right starting point, simply because you don’t have a credit control team and you don’t have the time to chase invoices alongside everything else you’re doing. Outsourcing that work to a funder who does it every day removes a significant operational burden in your first year.
Why invoice finance suits new-start businesses
Established businesses can absorb a slow-paying customer because they have cash reserves, credit lines, and headroom to fall back on. A 60-day debtor is irritating, but it’s survivable.
New businesses don’t have that luxury. Your reserves are whatever’s left of your launch capital, your credit lines are limited or non-existent, and your headroom is often the difference between paying staff this month and not. An established business might have a lot of customers spreading the risk, but you’ve probably got three or four, which means one of them paying late doesn’t just dent your cashflow, it can threaten the business itself.
Invoice finance addresses this directly by scaling with you as you grow, rather than being capped at a number set the day you signed up. It’s secured against your sales ledger, so the strength of your customers matters more than the age of your company, and it frees up the cash you need where you actually need it: wages, materials, and the next round of growth.
What to look for in a new-start funder
Plenty of invoice finance providers say they fund new-starts, but fewer have built their model around it. There are four things worth looking for.
Sector experience. A recruitment agency’s first six months look very different from a care provider’s first six months, with different cashflow cycles, different customer types, and different operational risks. A funder who genuinely understands your industry will price more accurately, underwrite more confidently, and run the day-to-day relationship more smoothly, so it’s worth asking the BDM what they know about your sector. The depth of the answer usually tells you everything you need to know.
Speed of decision. New businesses move quickly because they have to, and a good funder should be able to give you a clear indication of appetite within days and a fully live facility within weeks. The pace at which a provider responds to your initial enquiry is usually a reasonable indicator of the pace at which they’ll respond once you’re a client.
Flexibility on growth. Your facility should grow with you, but some funders set a limit at sign-up and treat every increase as a fresh application, while others build the facility to scale alongside the business as it develops. The right model for a new-start business is one that doesn’t require fresh paperwork every time you win a new contract.
Relationship over process. This last one is harder to assess on paper, but you’ll know it after the first proper conversation. Some funders feel transactional, while the better ones feel genuinely invested in your business succeeding, and given you’ll be working with these people for years if the relationship is right, it’s worth paying attention to how those early conversations feel.
How we approach it at Team Factors
We’ve built our new-start funding model around what new businesses actually need, rather than what’s easiest for us to deliver.
Every client works with a dedicated Relationship Manager, which means an actual person who learns your business and stays with you as it grows, rather than a portal or a ticketing system. For new-start clients, that relationship is often the difference between a workable facility and a genuinely useful one, because you’ll have questions in your first six months that nobody else can answer, and having someone on the phone who knows your sector and your set-up saves a lot of expensive mistakes.
We move quickly when the case is right, with some of our facilities going live in 48 hours from first enquiry. Not every deal moves at that pace because not every deal needs to, but when the case is clear we won’t keep you waiting.
And we scale with the business. Some of our longest-standing clients came on as new-starts with smaller facilities and now run much larger facilities, which is how the relationship should work in our view.
Getting started
If you’ve got customers placing real orders and you’re thinking about how to fund the gap between completing the work and getting paid for it, you’ve got the foundation for an invoice finance facility, and the rest is a conversation.
Get in touch with the Team Factors team and we’ll talk through your business, your customers, your projected invoicing, and what kind of facility would make a real difference.
