Let’s be honest, cash flow is one of the biggest headaches in business. You can have healthy profits, strong demand, and still find yourself struggling to pay suppliers, cover wages, or invest in new equipment.
I’ve seen it countless times.
The good news? There are funding tools that can help, without dipping into your reserves or relying on a bank overdraft (which, let’s face it, most high street banks barely offer anymore).
Two of the most effective options are Asset Finance and Invoice Finance.
So… should you use asset finance or invoice finance?
Let’s break it down. I’ll explain when each works best, and how they can even work together.
Why This Matters Right Now
Back in the early 2000s, there were over £20 billion in overdrafts available to UK SMEs. These days? That figure has dropped closer to £2 billion. Meanwhile, the number of small businesses has skyrocketed.
That means more competition for fewer funding options and a lot of businesses struggling to manage cashflow.
The key isn’t just borrowing money. It’s knowing which type of finance supports your business model without putting pressure on it.
What’s the Difference Between Asset Finance and Invoice Finance?
Here’s a simple overview:
Let’s dig into what that actually means…
When Asset Finance Makes Sense
If you’re looking to grow and need equipment, machinery, vehicles or tech to get there, asset finance can be a smart move. Rather than paying the full amount upfront, which hits your cashflow hard, you can spread the cost.
There are a few options:
- Hire Purchase – You own the asset at the end of the term.
- Lease – You pay to use the asset for a period, then return or upgrade it.
- Refinance – You use existing assets you already own to release cash.
Example:
Let’s say you run a construction firm and need a new van. With asset finance, you could acquire it now and spread the cost over 3–5 years. Or, if you’ve already got valuable equipment, you could refinance it to free up working capital.
Explore options:
Asset Finance Services – Learn More
When Invoice Finance Works Better
Got cash tied up in unpaid customer invoices? You’re not alone.
Most B2B companies are working on 30, 60, or even 90-day payment terms. Meanwhile, your own bills don’t wait – staff, suppliers, rent, VAT…
Invoice finance solves that problem by releasing up to 95% of the invoice value straight away, instead of waiting weeks (or months) to get paid.
There are two types:
- Factoring – The lender manages your collections.
- Confidential/Invoice Discounting – You keep control of collections, but invoices are paid to the lender.
Example:
Imagine you’ve just delivered £40,000 worth of work. Instead of waiting 60 days to get paid, you access up to £36,000 the next day via invoice finance. That gives you breathing space to take on new contracts, or just stay current on your commitments.
Find out how it works: Invoice Finance Explained
Many Businesses Use Both – Here’s Why
You don’t have to pick just one. In fact, many of our clients use a combination of both:
Asset Finance to buy the tools and vehicles they need to grow Invoice Finance to cover the working capital gap while waiting for payment
Together, these tools help you preserve your own cash and plan more confidently.
What Happens If You Do Nothing?
Let’s be blunt. If you don’t invest in better equipment, your competitors will. If you keep waiting on late payments, it’s your business that carries the burden.
And that can mean:
- Missed opportunities
- Inability to fulfil new contracts
- Pressure on wages and tax bills
All of which are avoidable with the right finance structure in place.
The Right Finance at the Right Time – Without the Guesswork
Here’s the thing… there’s no one-size-fits-all answer.
But there is a smarter way to approach business funding.
At Howe Commercial Finance, we help you:
- Understand which option suits your needs
- Access the right lenders (not just the high street)
- Present your business clearly and confidently
- Secure fair, tailored funding that gives you breathing space
No jargon. No generic offers. Just honest advice.
Still Unsure? Let’s Talk.
Whether you’re stuck between options or need to move quickly, we’ll take the time to understand what your business really needs – and help you get it.
Call or message to speak with Paul directly
Or drop us an enquiry here: Contact Us
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