Can I Get Invoice Finance During a Company Restructuring?
Difficult but not impossible. If you're in formal insolvency (administration, CVA), most providers won't offer new facilities. But if you're restructuring informally (turnaround plan, management changes), some independent providers will consider it, especially if your customers are strong.
Why This Matters
Company restructuring creates immediate cashflow pressure precisely when invoice finance could help most. UK SMEs undergoing restructuring face a paradox: traditional lenders retreat, yet overdue creditors and operational costs continue. The distinction between formal insolvency proceedings and informal operational restructuring determines everything. Businesses in informal turnaround with creditworthy customers can often still secure selective invoice finance, but once a CVA or administration begins, new facilities become much harder to obtain. For directors navigating redundancies, site closures, or shareholder disputes, understanding which providers assess current trading strength rather than historical balance sheets can mean the difference between controlled recovery and forced liquidation. The UK invoice finance market (UK Finance members provide well over £20 billion at any one time) includes specialist turnaround lenders, but they require transparent disclosure and often charge 1.5-3% monthly rather than standard 0.3-0.8% rates. Critically, some restructuring scenarios (pre-pack administrations, phoenixing concerns) trigger enhanced due diligence that can stretch approval to 4-6 weeks, making early engagement essential before cashflow becomes critical.
Key Points
- Formal insolvency procedures (administration, CVL, CVA) typically disqualify you from new invoice finance, though existing facilities may continue under administrator control with lender consent.
- Informal restructuring (operational turnaround, management buyout, creditor negotiation without court involvement) keeps most providers accessible if you demonstrate viable trading.
- Specialist providers assess restructuring cases on debtor quality rather than applicant's historical financials, funding invoices to creditworthy customers even during company stress.
- Turnaround facilities commonly advance 70-75% (versus standard 85-90%) with monthly discount rates of 1.8-2.5%, reflecting higher perceived risk and closer monitoring requirements.
- Pre-existing County Court Judgements, winding-up petitions, or HMRC time-to-pay arrangements must be disclosed upfront; non-disclosure discovered during due diligence causes automatic rejection.
- Notification factoring (where customers know their invoices are financed) becomes mandatory during restructuring for most providers, eliminating confidential options.
- Approval timelines extend from typical 7-10 days to 4-6 weeks during restructuring due to enhanced credit checks, director interviews, and legal review of restructuring terms.
Illustrative example
Hypothetical: a Birmingham engineering subcontractor with £2.4m turnover enters informal restructuring after losing their largest contract, leaving £180k in legacy creditor debt and redundancy costs. The remaining customer base included three national construction firms on 60-day terms, representing £600k annual invoicing.
A specialist independent provider approves selective invoice finance on the three strong debtors only, advancing 75% at 2.1% monthly. With about £99k outstanding on 60-day terms at any one time, roughly £74k is drawn, which covers wages and materials while directors negotiate time-to-pay with legacy creditors.
The facility runs for 18 months until the company stabilises, then moves to standard terms at 0.6% monthly. The higher cost (about £28k over 18 months, versus about £8k at the standard rate) is accepted because the alternative is administration.
Common Pitfalls
- Assuming all restructuring is treated equally: a Time to Pay arrangement with HMRC is manageable; a published winding-up petition in the London Gazette typically ends all funding conversations immediately.
- Applying to high-street banks first: bank invoice finance divisions often decline restructuring cases, creating declined-application footprints that concern independent providers reviewing your credit history.
- Delaying application until cashflow is critical: turnaround providers need 4-6 weeks for restructuring due diligence; waiting until you can't make next week's payroll means even willing lenders lack time to complete checks.
- Hiding the restructuring details: providers conduct director searches, credit file reviews, and sometimes customer reference calls; discovering undisclosed CVAs or prior insolvencies causes immediate withdrawal regardless of debtor quality.
- Expecting confidential invoice discounting: restructuring scenarios trigger mandatory notification factoring where your customers are informed, eliminating the confidential options most directors prefer.
What to Do Next
- Document your restructuring status precisely: write a one-page summary stating whether you're in formal proceedings (CVA/administration) or informal turnaround, what triggered the restructuring, and current trading position versus legacy debt.
- Prepare a debtor analysis showing invoice values, payment terms, and settlement history for your top 10 customers over the past six months; providers assess these relationships more than your company accounts during restructuring.
- Engage specialist brokers who maintain relationships with turnaround-willing lenders; direct applications to standard providers waste time and create decline records.
- Request quotes from specialist independent providers, mentioning your restructuring status upfront to avoid wasted due diligence on providers with blanket policies against distressed businesses.
- Budget for 1.8-2.5% monthly costs and 75% advance rates rather than standard terms; restructuring facilities cost more but remain dramatically cheaper than factoring in administration (typically 3-4% monthly with 60% advance).
Related Questions
Can I get invoice finance with a County Court Judgement (CCJ) against my company?
Satisfied CCJs over 12 months old rarely block approval if current trading is strong. Unsatisfied CCJs under £10k may be accepted by some specialists at higher rates. Multiple unsatisfied CCJs or judgements over £25k typically require settlement before approval, though some providers allow settlement from first funding drawdown.
What's the difference between administration and informal restructuring for invoice finance purposes?
Administration is a formal insolvency procedure where an appointed administrator controls the company, typically ending all new lending relationships. Informal restructuring means operational or financial changes (redundancies, site closures, creditor negotiations) outside court-supervised insolvency, leaving directors in control and most specialist providers willing to assess based on current debtor strength rather than company history.
Will invoice finance providers contact my customers during restructuring due diligence?
Most turnaround specialists conduct 'soft' credit checks through credit reference agencies initially, avoiding direct customer contact. However, if proceeding to approval, expect debtor verification calls to your top three to five customers, presented as standard credit checks rather than highlighting your restructuring. This happens in roughly 70% of restructuring applications versus 20% of standard applications.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
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