Can I use invoice finance alongside a cashflow loan to cover seasonal demand? (Manufacturing)

Summary (quick answer): Yes — you can often combine invoice finance with a short-term cashflow loan to cover seasonal demand in manufacturing. The combination can bridge immediate supplier payments while invoice finance converts B2B invoices into working capital as orders are billed. Success depends on lender terms, security ranking, covenants, customer eligibility and overall cost. Start with a short eligibility check so we can match you to lenders who understand seasonal manufacturing cycles. Get Quote Now

Regulatory & compliance: UK Business Loans is not a lender and does not provide regulated financial advice. We introduce businesses to FCA-regulated brokers and lenders. This page is for general information only — not personalised financial advice.

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Quick summary: short answer

Yes — invoice finance can often be used alongside a cashflow loan to manage seasonal spikes in manufacturing. Invoice finance unlocks cash from B2B invoices as you raise them; a cashflow loan provides an immediate lump sum for pre-season stock, supplier deposits or additional labour. The two are complementary, but you must check lender restrictions, who holds security over assets or receivables, and any covenants that could restrict combined borrowing. For a tailored match, get a free eligibility check: Free Eligibility Check.

Why manufacturers use both

Manufacturers face specific seasonal cashflow pressures:

• Large pre-season raw-material purchases.
• Temporary workforce and overtime costs to meet peak orders.
• Higher inventory holding to fulfil retailer or contract requirements.
• JIT supply-chain risks that require faster supplier payment.

Benefits of invoice finance:

• Releases working capital tied up in unpaid B2B invoices.
• Scales with sales — more invoices = more available funds.
• Helps smooth collections and improves working capital ratios.

Benefits of a cashflow loan:

• One-off lump sum to cover a clear, short-term need (e.g., seasonal stock).
• Predictable repayment schedule for planning labour and supplier costs.
• Fast decision and drawdown for many short-term lenders.

Here’s how the two can work together: invoice finance gives you ongoing liquidity as you invoice customers; the cashflow loan bridges immediate gaps that invoice finance may not cover fast enough or for non-B2B customers.

How the two products can work together — practical examples

Example 1 — Pre-season stock build

Manufacturer A forecasts a seasonal surge. They need £150,000 to buy raw materials and pay suppliers two months before invoicing customers. They take a 3-month cashflow loan for £100,000 to place immediate orders, then use invoice discounting on B2B invoices to release a further £40,000–£50,000 as invoices are raised. Combined, they meet supplier terms and fulfil orders without delaying production.

Example 2 — Rapid order fulfilment

A factory wins a rush order requiring upfront supplier deposits. A short-term cashflow loan covers supplier deposits and overtime; invoice finance converts the resulting B2B invoices into cash on a rolling basis so the loan is repaid as payments arrive.

Example 3 — Mixed customer profile

If a portion of sales is to B2C or customers ineligible for factoring, invoice finance won’t cover those invoices. Use a cashflow loan to bridge the portion invoice finance can’t touch while invoice finance accelerates payments from eligible B2B accounts.

Mini case study (illustrative figures)

“Manufacturer B” needs £120k for seasonal purchase. They secure: cashflow loan £70k (3 months), invoice finance facility up to £50k on qualifying B2B invoices. Combined solution allows full stock purchase and smoothes cashflow through the season without dipping into reserves.

Get Quote Now — compare options fast.

Key lender considerations and compatibility issues

Security and ranking (who takes priority?)

Invoice financiers typically take a security interest over receivables and may require a floating or fixed charge. Cashflow loans can be unsecured or secured against business assets or via director guarantees. If both lenders require security, the order (ranking) matters — first-ranking charge has legal priority on realisations.

Common conflicts

• Invoice factors may refuse invoices already encumbered by other lenders.
• Cross-collateralisation: one lender taking security across multiple asset classes can restrict future borrowing.
• Cross-default clauses can trigger defaults across facilities if one lender is unpaid.

Operational and reporting implications

Invoice finance providers often require integration with your accounting system, access to debtor ageing and customer credit checks. Expect regular reporting, audit access and tighter credit control processes.

Cost considerations

Indicative pricing (illustrative only): invoice discounting fees ~0.5–3% plus interest on drawn balances; short-term cashflow loans can be priced at 1–5% monthly or a fixed fee depending on term and risk. Always compare effective annualised cost across providers.

Compliance note: Always disclose existing facilities to any lender. Not disclosing can invalidate offers or create default risk.

Practical checklist before applying

• Map which invoices are eligible for invoice finance (B2B, contract terms, UK-based customers).
• Assess customer concentration — a single large debtor can limit capacity or increase pricing.
• Gather latest 12–24 months bookkeeping, VAT returns, management accounts, aged debtors list and purchase orders.
• Confirm existing security (charges, mortgages) and talk through priority with an advisor.
• Decide your target funding mix — how much should be loan vs invoice finance?
• Consider operational impact — will credit control change? Is your accounting system supported?

How UK Business Loans helps

UK Business Loans connects manufacturers to lenders and brokers who understand seasonal funding needs. We’re an introducer — we do not lend. Complete a short enquiry and we’ll run a free eligibility check and match you to partners experienced in invoice finance and short-term cashflow lending. Get Quote Now.

For manufacturers seeking sector-specific support, learn more about our manufacturing options and sector specialists at our manufacturing page on manufacturing business loans.

Typical scenarios where combining is NOT recommended

• Invoice finance providers explicitly exclude combined or previously encumbered receivables.
• Existing secured debt already uses all available collateral — no headroom for new security.
• Seasonal need is small — an overdraft or supplier credit may be cheaper and simpler.
• Combined cost outweighs benefits: if fees push effective rates too high, consider alternatives such as inventory finance, supply-chain finance or negotiated supplier terms.

Free Eligibility Check — find the best route for your situation.

Step-by-step application process

1. Prepare documents: company details, 12–24 months accounts, VAT returns, management accounts, aged debtors, purchase orders and ID for directors.
2. Complete the UK Business Loans enquiry form: basic business details and funding required (Get Quote Now).
3. We match you to lenders/brokers who specialise in manufacturing funding.
4. Lenders carry out checks: soft vs hard credit checks (we’ll note which is which) and request full documentation.
5. Compare offers, ask lenders about ranking, security and exit terms, then decide.

Timeframes: initial matches and soft eligibility often within 24–48 hours. Formal offers and drawdown usually take several days to a few weeks depending on complexity and security.

FAQs

Want a personalised answer? Get a free eligibility check.

Final call-to-action & reassurance

Avoid losing orders this season. Complete our short enquiry and we’ll match you to lenders and brokers experienced in manufacturing funding. Free, no-obligation quotes and eligibility checks — Get Quote Now.

Legal reminder: UK Business Loans is not a lender and does not provide regulated financial advice. We introduce businesses to FCA-regulated brokers and lenders. This page is for general information only — not personalised financial advice.

About the editorial team

Content prepared by the UK Business Loans editorial team — industry-experienced writers and finance specialists. Last updated: October 2025. For more on our service and how we vet partners, see About Us.

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Quick comparison table

Product	Best for	Timing	Typical cost notes
Invoice finance	Convert B2B invoices into cash	Rolling (as invoices raised)	Fees 0.5–3% + interest on drawn amounts (varies).
Cashflow loan	Immediate lump-sum for seasonal stock/payments	One-off drawdown (days/weeks)	Fixed fee or monthly interest 1–5% depending on provider.
Combined solution	Peak-season bridging + ongoing working capital	Loan for immediate needs + invoice finance for receivables	Higher combined fees but avoids lost revenue and preserves supplier relationships.

1. Can I use invoice finance and a cashflow loan together to cover seasonal demand in manufacturing?
Yes — many manufacturers combine invoice finance with a short-term cashflow loan to bridge upfront supplier costs and unlock working capital from B2B invoices, subject to lender agreement on security and covenants.

2. Will combining invoice finance and a cashflow loan increase my overall borrowing costs?
Potentially — you’ll typically pay fees on both products, but the combined solution can be cheaper than lost orders or overstretched supplier relationships when judged on overall business impact.

3. How quickly can I get funds from invoice finance or a cashflow loan?
Initial eligibility checks can be same day, and funds for straightforward cashflow loans or invoice finance lines commonly draw within days to a few weeks depending on due diligence and security.

4. Do invoice finance providers allow selective financing of invoices for mixed B2B/B2C sales?
Yes — many funders offer selective or disclosed invoice finance so you can choose which eligible B2B invoices to place with the provider.

5. Will applying via UK Business Loans affect my credit score?
No — submitting the enquiry form to UK Business Loans is just an introduction and won’t affect your credit, though lenders may perform soft or hard checks later in the process.

6. What documents do lenders typically need to assess invoice finance and cashflow loan applications?
Lenders commonly ask for 12–24 months of accounts, VAT returns, management accounts, aged debtors, purchase orders, and ID for directors to assess eligibility and debtor quality.

7. Do I need to disclose existing facilities and charges before applying for combined finance?
Always disclose existing facilities and any charges because ranking and cross-default clauses can affect whether lenders will provide combined invoice finance and cashflow loans.

8. Can invoice finance cover invoices from overseas or high-risk customers?
It depends — many invoice finance providers limit eligibility to UK-based B2B customers and will refuse higher-risk or concentrated debtors after credit checks.

9. How do I decide how much should be a cashflow loan versus invoice finance for seasonal peaks?
Assess your immediate lump-sum needs (stock, deposits, labour) for a short-term loan and use invoice finance to scale working capital with billed B2B sales, then consult brokers to optimise cost and security.

10. Are the lenders and brokers UK Business Loans introduces FCA-regulated and trustworthy?
Yes — UK Business Loans introduces you to FCA-regulated brokers and lenders within its vetted network, and the enquiry form is a free, no-obligation way to be matched with suitable partners.