Can I Get Invoice Finance During a Company Restructuring?
Sometimes. If the company is in a formal insolvency process (administration, a CVA or liquidation), new invoice finance is hard to get. If you are restructuring informally, for example cutting costs or agreeing more time with creditors, some lenders will still look at an application, mainly based on how reliably your customers pay.
Formal insolvency or informal changes
The answer depends mainly on which kind of restructuring you are in.
- Formal insolvency means a legal process such as administration, a company voluntary arrangement (CVA) or liquidation. In administration, control of the company and its assets passes to an administrator, who must be a licensed insolvency practitioner (GOV.UK). New invoice finance is hard to get once a formal process has started. An existing facility may carry on, but that is up to the lender and the insolvency practitioner.
- Informal restructuring means changes the directors make themselves, such as cutting costs, closing a site, changing managers or agreeing extra time with creditors (for example an HMRC Time to Pay arrangement). There is no court or insolvency practitioner involved, and some lenders will still look at an application.
What a lender will look at
- Your customers. Invoice finance is repaid when your customers pay. If they are reliable and the invoices are not in dispute, a lender may still help even when your own accounts look weak.
- Whether you are still trading normally. The lender wants to see that the work behind the invoices is done and that you will keep delivering.
- Anything against the company. Expect to be asked about County Court Judgments, HMRC debts, payment plans and any winding-up petition. Say so up front. Lenders check public records, and leaving something out is likely to end the application.
What to expect
In most cases the terms will be tighter than for a business in good health. The lender may pay a smaller share of each invoice, charge more, fund only some of your customers, or want your customers told that their invoices are financed. The checks can also take longer, so start talking to lenders before cash runs out, not the week payroll is due. No lender publishes its terms for businesses in restructuring, so the only way to know is to ask for a quote.
What to do next
- Write a short note on where the company stands: formal or informal, what went wrong, and what has changed.
- List your main customers with what they owe, their payment terms and how they have paid over the last six months.
- Tell each lender about the restructuring at the start, so you do not waste time on lenders that will not help.
- If the company may not be able to pay its debts, take advice from a licensed insolvency practitioner before you take on new funding.
Related questions
Can I get invoice finance with a County Court Judgment against my company?
Sometimes. Lenders treat a CCJ that has been paid differently from one that has not, and each lender has its own view. Tell the lender about it and ask.
What is the difference between administration and informal restructuring?
In administration an administrator takes control of the company under a legal process. In an informal restructuring the directors stay in charge and make the changes themselves, without a court process.
Will a lender contact my customers?
It may. Many lenders check some invoices with the customer before they fund them. Ask how they do this, and whether your customers will be told the invoices are financed.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam was managing director of Penny, a UK invoice finance business, from July 2020 to November 2023. His career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library. Career record.
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