Metro Bank Invoice Financing: What You Need to Know

Invoice financing is an increasingly popular form of lending, with the market predicted to grow 8.16% year-on-year between now and 2032. When looking for invoice finance providers, businesses can choose from a range of specialist lenders and generalists. 

In this article, we discuss Metro Bank invoice financing, which has been a big focus for the challenger bank. We’ll break down what Metro Bank provides, the benefits of its solutions and other handy options to keep your business moving.

What is Metro Bank’s invoice financing?

Metro Bank offers small businesses two main types of invoice finance, plus a tailored, more modest solution for newer businesses. The bank aims to make funding accessible and manageable for SMEs that need relief or support with managing their cash flow.

Here’s an overview of the main invoice finance solutions offered by Metro Bank:

1. Invoice factoring

With Metro Bank’s invoice financing, you can get up to 85% of your invoice value advanced within 24 hours and leave credit control to Metro Bank. This means the lender takes responsibility for getting the invoices paid, so you can spend less time chasing payments. Invoice factoring is designed for businesses without an in-house credit control team, giving you funds and support to manage your invoices.

2. Invoice discounting

This is similar to factoring in terms of cash flow, but without the added credit control support. Invoice discounting keeps your ledger and client relationships confidential, as Metro Bank works behind the scenes, providing the cash, but leaving the responsibility with you to make sure your clients pay up. This is ideal for businesses that already handle their own credit control and want a discreet financing option.

3. Small business option

Metro Bank’s simplified package specifically for smaller or new businesses provides up to £100,000 in funding. With one single service fee and no discount fees, this option offers straightforward pricing and access to essential funds for businesses with growing cash flow needs​​​.

How does Metro Bank invoice financing work?

Invoice finance with Metro Bank is designed to be simple, sharing the invoices you want paid and letting the funder handle as much of the rest of the process as you want. Here’s a step-by-step look at how Metro Bank invoice financing works:

1. Invoice creation: You send an invoice to your customer (debtor) for goods or services provided.
2. Upload your invoices: Once the invoice is issued, you upload it to Metro Bank’s system. This submission allows the bank to review and prepare to fund the invoice.
3. Funds availability: Metro Bank can make up to 85% of the invoice value available to you, often within 24 hours. This quick access to funds provides you with cash flow to support ongoing business needs.
4. Credit control by Metro Bank (factoring): Businesses using Metro Bank’s factoring service can hand over credit control management, meaning the lender follows up on payments and manages collections directly.
5. Payment collection: When your customer pays the invoice, they send the payment directly to Metro Bank. Once received, the bank forwards the remaining balance (minus fees) to you.

How high are the fees with Metro Bank invoice finance?

Service fees for Metro Bank invoice financing are between 1 and 3% and discount fees range from 1.5 to 3.5%, depending on various factors. However, with the bank’s small business option, the bank waives discount fees for users, reducing your overall borrowing costs.

Why choose Metro Bank invoice finance?

Invoice finance is a useful way to turn your accounts receivable into ready cash, and the Metro Bank process offers several advantages to small businesses. Here are the main benefits of Metro Bank’s invoice financing solutions:  

Access to funds, fast

Get cash from your unpaid invoices quickly, with up to 85% of the invoice value accessible within 24 hours. This can help you ease cash flow problems, so you can focus on growing your business instead of waiting for customers to pay​​.

Flexible terms with no long commitments

Metro Bank invoice finance solutions offer flexibility for users, with different options to suit varying funding needs and preferences. Also, you can cancel your contract with a month’s notice, without any penalty fees, meaning no long-term commitments to the finance facility. 

Straightforward fees

As mentioned, with service fees between 1-3% and discount fees from 1.5-3.5%, you know upfront what to expect. Metro Bank’s small business option waives discount fees, making it a cost-effective solution for smaller businesses​​.

Credit control assistance (if you want it)

With invoice factoring, Metro Bank takes on the role of credit control, managing invoice collection and customer payments on your behalf. 

Is Metro Bank invoice finance right for your business?

Metro Bank’s invoice financing services could be a good fit if you:

• Are a small to medium-sized business needing regular cash flow boosts.
• Sell products or services on credit and want to access funds before customer payments come in.
• Don’t have an internal team to manage credit control (factoring) or already have a reliable credit control system in place (discounting)​​.

How much notice do I have to give to end a Metro Bank invoice finance contract?

Metro Bank invoice finance solutions come with flexible contracts that only require 28 days’ notice for cancellation, with no penalties attached. This is ideal if you’re looking for a short-term cash flow solution that doesn’t lock you in​​.

Limitations of invoice finance

Invoice finance can be a valuable support for businesses waiting for invoices to be paid, but it comes with limitations. Here are a few of the drawbacks to consider:

• The financing limit is set by the value of the outstanding invoices.
• It may not provide the level of funding required, especially in slow periods.
• The total cost of borrowing can be higher than certain working capital funding solutions.
• Some businesses can be wary of perception, in factoring solutions where the lender is responsible for chasing clients for payment.  

Alternatives to Metro Bank invoice financing

Metro Bank’s invoice finance products are a solid choice for businesses looking to improve cash flow using unpaid invoices, especially those that would benefit from outsourced credit control. 

However, there are several alternatives to consider, such as:

• Working capital loans: These are short-term finance options that provide timely capital when you need it, to plug cash flow gaps, pay tax bills, purchase inventory and assets or ramp up promotional activity. They are typically unsecured loans, which provide quick access to funds and flexible repayment terms, without the need for collateral. 
• Merchant cash advances (MCAs): These are a form of revenue-based funding where loans are repaid as a percentage of future card sales. As MCAs scale with your performance, repayments are lower in slower periods and higher as your revenues increase. 
• Business lines of credit: Using a line of credit gives you flexibility to draw down funds up to an agreed limit, as and when you need working capital,  and you only pay interest on what you use. It’s a revolving credit facility, so you can top up once you’ve repaid the funds borrowed for ongoing cash flow needs and when key operational expenses are required.

Using a flexible business loan to finance your growth plans and cash flow management 

If flexibility and speed are top priorities for your business, iwoca’s Flexi-Loan can be an ideal option. We offer rapid access to funds without the need to provide invoices for collateral or risk your accounts receivable.

You can apply and get approved fully online for a highly flexible business loan that gives you control, quick access to funds and the freedom to repay on your terms. 

Here’s what you can expect from our Flexi-Loan solution:

• A range of loan amounts: Borrow between £1,000 and £1 million, whether you’re managing short-term cash flow or planning for the future. 
• Flexible repayment: Repayment periods range from 1 day to 60 months, with the ability to overpay or repay early with no extra charges.
• Rapid funding: With finance decisions often made within hours, funds can be deposited into your account as quickly as the same day.
• Agile and adaptable: Top up your loan as needed once you’ve repaid a third of the outstanding balance.
• Interest that fits your cash flow: You only pay interest on the amount you actually draw down, not the entire loan amount, which helps to reduce overall borrowing costs​.

Find out more about iwoca short-term loans and see how much you could borrow with our business loans calculator. 

Sources:

• Invoice Factoring Market Size by Category (International, Domestic), Type (Non-Recourse, Recourse), Financial Institution (Non-Banking Financial Institutions, Banks), Regions, Global Industry Analysis, Share, Growth, Trends, and Forecast 2023 to 2032
• Metro Bank Invoice Finance – Improving Your Cash Flow

‍