Myth: Invoice Finance is a Last Resort. Fact: Invoice Finance Helped Our Client Raise a Series A.

What’s the most common myth surrounding invoice finance? That invoice finance is for struggling businesses… Colm Devine is here to bust this myth once and for all- with proof.

By Colm Devine, Chief Sales Officer, Teybridge Capital Europe

Our client, a logistics technology company, grew their turnover by over 20 times in a single year and they are on track to hit £100 million in revenue in the coming months. They used invoice finance throughout their growth journey. Their clients were not concerned, their investors were not concerned, and their bank was not concerned. In fact, a major global bank liked what they saw so much that they entered a co-lending arrangement alongside our facility.

Invoice finance did not make that business look like it was struggling. So let’s talk about that myth. For a long time, invoice finance carried a particular label: lender of last resort. The assumption was that if a business was using it, things weren’t going well, that it was the option you turned to when the bank had said no and the options had run out.

I have been in this market for over twenty years. That perception has never been accurate, and today it is further from reality than ever. Here is why.

The Market Has Changed Considerably

Invoice finance is now increasingly mainstream funding tool used by a far wider range of businesses than many people realise.

More companies than you might expect are using invoice finance today, not because they have run out of options, but because it is genuinely the right product for a specific and very common problem: the gap between when you raise an invoice and when your customer actually pays it.

Most businesses have to offer payment terms to their customers. Thirty days, sixty days, ninety days in some cases. That’s just how trading relationships work, especially with larger, established companies. And as a result, most large companies are entirely used to dealing with invoice finance providers. It is a normal, everyday part of how they manage their supplier relationships.

In our experience, the concern about how customers will react tends to ease quite quickly once business owners understand just how common receivables arrangements have become. Accounts payable teams at larger companies encounter this regularly, and it is very much considered standard practice.

Times Are Changing, and So Is the Product

There are now far more invoice finance providers in the market than there were even five years ago, and the product itself has become significantly more streamlined and efficient. Technology has transformed the way facilities are managed. What once involved a lot of paper and process can now be handled quickly and digitally, giving businesses faster access to the cash they’ve already earned.

That evolution has attracted a different type of client. We’re seeing venture-backed technology companies, high-growth logistics businesses, fast-scaling manufacturers and e-commerce brands all using invoice finance as a deliberate, strategic part of how they fund their growth. The common thread is not financial difficulty, it’s a recognition that invoice finance is simply the most efficient way to manage a very specific and very common cash flow challenge.

We’ve Actually Seen the Opposite of What the Myth Predicts

What is most compelling is that when this conversation comes up, the real-world evidence doesn’t just challenge the myth, it points quite firmly in the other direction.

As mentioned, we recently worked with a logistics technology company that is a strong example of this. When we started working with them, they were at an early stage of their revenue journey, with a strong debtor book of well-known global e-commerce retailers. We put an invoice finance facility in place to bridge the working capital gap between their operating costs and their customers’ payment terms.

In just 18 months, the business grew by several hundred percent year on year. Our Invoice facility scaled alongside them, from an initial £2.5 million to £15 million. Over that period, we funded over £52 million in invoice value across more than 600 transactions and 13 separate debtors.

And crucially, because the working capital gap was being handled through the invoice finance facility rather than through equity, the business was able to preserve its capital for growth rather than burning it on operational cash flow management.

The result? The company arrived at its next funding round in a significantly stronger position than it would otherwise have been. It secured a substantial Series A raise, led by a prominent European technology investor. The invoice finance facility was in place throughout that process. The investors weren’t concerned about it. If anything, the fact that the management team had been using the right funding tools for the right purposes was a positive signal about how they manage capital.

And then, after that raise, the business attracted the interest of a specialist lending division of a major global bank, one that works exclusively with high-growth, equity-backed companies. That bank entered a co-lending arrangement alongside our facility. Both sit within the same capital structure, each doing its own job.

The Benefits Worth Keeping in Mind

When I talk to business owners who have explored invoice finance properly, the feedback is usually that it addresses a problem they hadn’t fully considered, and that it fits more naturally into their funding structure than they expected.

Here are some of the key benefits, particularly for growing businesses:

You don’t have to give away more equity. As we saw with this client, using invoice finance to manage working capital means equity is preserved for what it’s meant for: building the business, entering new markets, and attracting the right investment at the right time.

It grows with you. Unlike many fixed facilities, invoice finance scales naturally with your revenue. The more you invoice, the more you can draw down. That means it never becomes a constraint on growth in the way that a fixed credit line might.

You can offer the payment terms your customers expect. Large, established companies often require thirty, sixty or ninety-day terms as a condition of doing business. Invoice finance makes it commercially viable to say yes to those relationships, because you’re not waiting months for the cash to arrive.

It can help you raise more money, not less. This is the one that surprises people the most. As we saw with our client, managing working capital well through a receivables facility means the business grows faster, the revenue profile is stronger, and the cap table is cleaner. All of which makes the business a more attractive prospect when it goes out to investors, and puts management in a stronger negotiating position when it does.

A Final Thought

Invoice finance is not what it was twenty years ago. The companies that understand this, and that use invoice finance as a deliberate part of their funding strategy, are the ones growing fastest, preserving the most equity, and arriving at their next funding milestone in the strongest positions.

If you’ve been hesitant because of the reputation, I hope this gives you a clearer picture. And if you’d like to have a conversation about what a facility could look like for your business, we’re always happy to talk it through.

You can read the full case study referenced in this post, covering how a fast-scaling logistics technology company used invoice finance to achieve extraordinary growth and secure significant Series A investment, all without giving away additional equity. Read it here