Invoice finance solutions could help businesses to re-establish themselves and provide them with greater financial freedom during difficult times, helping them to improve the success of their ventures.
What is invoice financing?
Invoice finance is a method of generating cashflow by using invoices as the main asset against which money is raised. Invoice finance is available in two different formats: factoring and invoice discounting.
What is factoring invoice finance?
Factoring invoice finance creates funds against invoices and allows full credit control. These services can be combined with bad debt protection if required.
What is invoice discounting finance?
Invoice discounting finance also creates funds against invoices and allows full credit control, as with factor invoice finance. The service can also be combined with bad debt protection but also has the option to be confidential.
How do they work?
Invoice financing works on a simple principle whereby the lender agrees to pay the business a certain percentage of the invoice value which can often be as much as 90%.
This service will entail a small charge by the lender but they will take responsibility for managing the sales ledger with regards to both the cash advance and the invoice factoring.
What is invoice factoring?
Invoice factoring services are a great way for businesses to gain the funds they need to trade by outsourcing the management of credit to a specific company. Invoice factoring services have a number of benefits within the business world, which include:
- Being able to pay up to 90% of the value of the invoice to you within one working day. This means that should your customer be unable to meet the payment requirements you are not left out of pocket.
- The service is not static but instead grows with your business, meaning that there is no need for to increase your overdraft limit over time.
- It enables you to stay on top of current trends and take advantage of new opportunities without worrying about debtors.
What at are the benefits of invoice finance?
Like invoice factoring, there are a number of benefits for invoice financing. The main of these is that, regardless of your business’ particular situation, you will be able to have immediate access to your cash. This means that there is more positive cashflow within your business which can then be invested in other ventures and opportunities in order to enhance your business’ success.
Unlike traditional methods of money lending there are no large restrictions meaning that you do not have to keep adjusting your overdraft levels. Instead the system grows with your business in order to give you more financial freedom. The benefits are also not limited to which method of invoice finance you use and are applicable to both factoring and discounting invoice finance.