Working capital (UK)

Funding designed to solve timing gaps, especially for B2B startups waiting on invoices or contracts to be paid.

Most founders use working capital when the problem is timing, not demand.

If you are delivering work now but getting paid later, working capital products can smooth cashflow without dilution.

Working capital is repayable funding designed to cover short-term cashflow gaps. For most B2B startups, the core product is invoice finance, where funding is provided against unpaid invoices. Broader working capital products can also include contract finance, purchase order finance, and trade finance.

At a glance

Best for	B2B businesses with invoices or contracts, especially long payment terms
Most common use	Smooth cashflow gaps, fund delivery, reduce late-payment stress
Typical ticket size	Often linked to invoice book size and debtor risk
Speed	Can be quick once invoices and debtors are verified
Collateral / guarantees	Often secured against invoices or contract receivables; guarantees vary
Trade-off	Solves timing problems, but fees can stack up and bad debt risk can reduce availability

When working capital is not the best fit

You have predictable recurring revenue

If your business is SaaS with predictable revenue, revenue-based financing may be a better fit than invoice finance.

You are pre-revenue

Working capital relies on real invoices or contracts. Pre-revenue startups usually need grants, equity, or startup loan programmes.

You need equipment or infrastructure

If the funding is tied to capex, asset finance is usually a better category.

Working capital providers

A starting list. As you expand this, capture invoice type, debtor requirements, and fee structure.

InvoicesContractsCashflow

Provider	Region	Typical ticket	Stage	Needs revenue	Notes
Invoice finance providers (factoring / discounting)	UK	Linked to invoice book and debtor quality	Trading businesses	Yes (invoices)	Designed to smooth cashflow when customers pay late. Underwriting often depends on debtor risk and invoice quality.
Contract / purchase order finance providers	UK	Varies by contract and risk	Trading businesses with contracts	Often	Funding tied to contracts or confirmed orders. Useful when delivery costs come before payment.
Trade finance providers	UK	Varies	Trading / import-export	Often	Products supporting supplier payments and trade cycles. Terms vary widely by sector and risk profile.

FAQs

Is working capital the same as invoice finance?

Invoice finance is the most common working capital product for B2B companies, but working capital is broader. It can also include contract finance, purchase order finance, and trade finance.

What is invoice finance?

Invoice finance provides funding against unpaid invoices. Instead of waiting 30, 60, or 90 days to get paid, you receive a portion of the invoice value earlier, then repay once the customer pays.

When does working capital make sense for startups?

It makes sense when you have real invoices or contracts and the problem is timing, not demand. If your revenue is uncertain, working capital can add pressure rather than reduce it.

Does invoice finance work for SaaS?

It depends. Some SaaS businesses invoice annually and can use invoice finance, but many SaaS models are better suited to revenue-based financing if recurring revenue is predictable.

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