B2B finance is any finance involved when one business sells to another, and the phrase points two ways at once. Usually it means borrowing, because money is going out of your business before the customers who owe you have paid. Sometimes it means the opposite: letting your own business customers pay later. Those are two different problems with two different sets of products, and mixing them up sends you to the wrong provider.

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Which kind of B2B finance you're looking for

B2B stands for business to business, so B2B finance describes who is involved rather than a product you can apply for. Four quite different things get called by that name.

You want to borrow. Your business needs money, and the reason is usually timing. You've delivered the work, the invoice is out, and the cash lands in 60 days while wages, stock, and VAT don't wait. This is the common case.

You want to let your customers pay later. A trade customer is asking you for terms, 30 days or more before they settle up. That's offering your customers time to pay, and it's a different decision with a different set of risks.

You run a platform and want finance built into it. If you take payments from business buyers and want the option to spread the cost to appear at the point of sale, you're after embedded lending, usually sold as business to business buy now, pay later. That's a question for your payments provider rather than a lender.

You've found the phrase used as a label. 'B2B banking' and 'B2B financial services' describe banks that serve companies instead of consumers, and B2B Bank is a Canadian bank that happens to be called that. None of the three is a product a UK company can use.

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If you need to borrow, start from the problem

Nothing is sold under the name B2B finance, so the useful question isn't which option is best. It's which problem you have. Five named products cover almost everything a limited company needs, and each answers a different one:

• A cash flow gap, with nothing in particular to secure it against. An unsecured business loan gives you a lump sum and a repayment schedule you can put in a forecast.
• Money tied up in invoices you've already raised. Invoice finance advances you most of the value of an unpaid invoice and settles up when your customer pays. It suits you if your whole ledger sits on 60 day terms, much less so if the problem is one awkward payer.
• A van, a machine, or kit you need to buy. Asset finance spreads the cost over the working life of the thing, with the asset itself as the security.
• A supplier who would give you time to pay if you asked. Trade credit is the cheapest finance on this list, because it's usually free, and the most overlooked. Ask before you borrow.
• A large customer whose own bank will fund your invoices. Supply chain finance only exists where your buyer arranges it, so that one is a conversation with your customer rather than an application to anybody.

Who you go to depends on which of the five you picked. Banks and non-bank lenders do loans, invoice finance, and asset finance. Your suppliers give trade credit. Your customer's bank sets up supply chain finance. Nobody sells a product called B2B finance, which is why searching the phrase turns up brokers, comparison sites, and a company that has registered it as a name.

Whichever you go for, a lender is weighing up the same thing: whether your business can afford the repayments. That means your turnover, how long you've been trading, and your business credit record. It isn't the size of the logo on your customers' invoices.

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If you want to give your customers time to pay

Offering payment terms is a sales decision before it's a finance one. Our 2024 research with Cebr found that 48% of business customers have avoided a supplier, or considered it, because its payment terms were short or non-existent. Plenty of suppliers have moved: the share offering terms longer than 60 days went from 7% in 2020 to 17% in 2024. If you sell to businesses that are themselves waiting to be paid, your terms are part of your price.

What decides how you do it is who loses the money when a customer doesn't pay. Give terms straight off your own balance sheet and that's you, holding the debt on goods you've already shipped. Use a provider that pays you at the point of sale and the risk sits with them instead. iwocaPay works that way: your trade customer can pay now or spread it over 30 days, three months, or 12 months, we pay you upfront either way, and you choose whether to absorb the cost or pass it on.

Sometimes you need neither. If the problem is one business paying late rather than everyone paying slowly, you can charge statutory interest of 8% plus the Bank of England base rate on a late commercial payment. An agreed payment date should usually fall within 60 days, and anything longer has to be fair to both sides. Putting the interest on an invoice sometimes changes a payer's habits on its own, and it costs you nothing to do.

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When the gap is between delivering the work and getting paid

You're more likely to need finance because of the wait than because you're growing. You've done the work, the invoice is approved, and the money is a month or two away, while payroll runs monthly and your own suppliers want paying now.

An iwoca Flexi-Loan is a business loan with flexible repayment options for UK limited companies, and it's built for that shape of problem. If you're waiting on an invoice, a Flexi-Loan can cover the gap, and you can clear it with no early repayment fee once your customer pays. You choose a fixed term of between 12 months and five years, so you know what you're committing to, and that fee-free early repayment is why many of our customers only take out our finance for a few weeks, or even days.

Flexi-Loan in action: VCare24

Victoria Simpson's social care business waits 30 to 60 days to be paid by local authorities, while 200 staff are paid monthly. She draws around £200,000 against payroll and repays it within a week as the money comes in. ‍

Read Victoria's story

This bites hardest if you sell to a handful of large customers, where one invoice settled late is most of a month's cash, and if your own costs are fixed and fall due every month.

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