Invoice finance during a CVA or administration

A rescue procedure does not remove the need for working capital; it usually sharpens it. A company in a CVA is still trading, still paying wages and suppliers, and doing so while making scheduled contributions to creditors. An administrator trading a business while seeking a buyer needs cash to keep it alive. Invoice finance fits both situations because it advances money against sales the company is already making: as invoices are raised, a percentage is released immediately, so funding scales with trading rather than with the company's battered balance sheet. Specialist lenders do fund companies in approved CVAs and administrations, though terms reflect the risk and the arrangement is made with the insolvency practitioner involved at every step. Used this way, invoice finance is not more debt piled on a failing company; it is the cash-flow engine that lets an agreed rescue plan actually run. UK Finance; R3, the insolvency trade body

Why rescue procedures still need working capital

A CVA compromises historic debt, but the company must fund current trading and the agreed monthly contributions from ongoing cash flow. In an administration, the administrator may keep the business trading to sell it as a going concern, and trading costs money the company usually does not have. In both cases the gap between doing the work and being paid for it, often 30 to 90 days on business invoices, is exactly the gap the rescue cannot afford.

How a facility works inside a rescue

Invoice finance advances an agreed percentage of each invoice as it is raised, with the balance, less fees, paid when the customer settles. Because the security is the debtor book and the underwriting looks at the creditworthiness of the customers who owe the money, a facility can keep running, or be newly arranged, even though the company itself is in a formal procedure. Many companies entering a CVA already have a facility in place; whether it continues is a negotiation between the lender and the supervisor, and keeping the lender informed early is usually decisive.

What lenders look at

A lender funding into a CVA or administration focuses on the quality of the debtor book: who the customers are, whether the invoices are clean and undisputed, and how concentrated the book is. They will want to see the CVA proposal or the administrator's strategy, evidence the rescue plan is realistic, and clarity on who controls collections. Expect tighter advance rates and closer monitoring than a healthy company would get. Disputed invoices, heavy customer concentration or contractual terms that restrict assignment are the usual blockers.

The insolvency practitioner leads

Nothing here happens around the IP; it happens through them. The supervisor of a CVA or the administrator decides whether new funding serves the rescue, and any facility must fit the approved proposal. If you are considering a CVA and expect to need working capital through it, raise that with the IP at the planning stage so the funding is part of the proposal creditors vote on, not an afterthought. We can arrange a free, confidential introduction to a Licensed Insolvency Practitioner; where new finance is part of the plan they advise on, an FCA-authorised broker handles that separately.

Who we are and how referrals work

LTD Turnaround is an information and introduction service. We do not provide legal, insolvency or financial advice. Insolvency matters are referred to a Licensed Insolvency Practitioner. Finance is referred separately, and only after insolvency advice, to an FCA-authorised broker. We may receive a referral fee; this does not affect what you pay or the service you receive.

Reusing a company name, buying assets from a company you were a director of, or taking on new borrowing while the company is insolvent can carry criminal and personal liability risk. Before acting, take advice from a Licensed Insolvency Practitioner and, where a company name or disqualification question is involved, a solicitor.

Common questions

Can a company in a CVA get invoice finance?

Yes, specialist lenders fund companies in approved CVAs. The lender assesses the quality of the debtor book and the credibility of the rescue plan, and the facility must work within the CVA proposal, so the supervisor is involved throughout.

Will an existing invoice finance facility survive entering a CVA?

Often, but it is the lender's decision and depends on the proposal. Engaging the lender before the CVA is filed, so the facility is reflected in the plan creditors approve, gives the best chance of continuity.

Why invoice finance rather than a loan for a company in a rescue?

A term loan is underwritten on the company's balance sheet and history, which a distressed company fails. Invoice finance is secured on invoices to the company's customers and underwritten largely on those customers' creditworthiness, so it remains available where a loan would not be.

Who decides whether new funding is right during an administration?

The administrator. They control the company while it is in administration and will only take on funding that serves the purpose of the procedure, usually keeping the business trading long enough to sell it as a going concern.

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Invoice finance during a CVA or administration. A rescue procedure does not remove the need for working capital; it usually sharpens it. A company in a CVA is still trading, still paying wages and suppliers, and doing so while making scheduled contributions to creditors. An administrator trading a business while seeking a buyer needs cash to keep it alive. Invoice finance fits both situations because it advances money against sales the company is already making: as invoices are raised, a percentage is released immediately, so funding scales with trading rather than with the company's battered balance sheet. Specialist lenders do fund companies in approved CVAs and administrations, though terms reflect the risk and the arrangement is made with the insolvency practitioner involved at every step. Used this way, invoice finance is not more debt piled on a failing company; it is the cash-flow engine that lets an agreed rescue plan actually run.