For small businesses that there are looking to grow and support their cash flow, there are a number of different business funding options on offer to support them. One of these is invoice financing an innovative financial product that can help companies manage their cash flow.
Many small-business owners will be keeping an eye on their ongoing cash flow. After all, cash flow is among the most important indicators of success and is a vital aspect of business financing.
Fortunately for companies that there are looking to grow their business and support their cash flow, there are a number of different business funding options on offer to support them. One of these is invoice financing an innovative financial product that can help companies manage their cash flow.
Invoice finance works by assigning invoices to a finance company that advances up to 90% of the invoice value upfront. The finance company then waits for your debtor to pay their invoice (as per their standard payment terms), at which point the 10% balance (less a small once off discount fee) is passed onto you/your business. There are no interest payments that are due nor is it a loan. Invoice finance can be thought of as providing an upfront settlement discount for receiving immediate payment, instead of waiting 45-90+ days for your debtor to pay.
Improved cash flow:
Prompt payment through invoice financing can put your business in a much sturdier financial position as your business get its cash upfront.
More resources to invest in your business:
Once you remove the administrative burden of chasing payments, companies can put those resources into expanding their operations.
Financing to scale with your business:
Alternative financing methods like a business overdraft often won’t change over time, making them unreliable for rapidly growing businesses. On the other hand, invoice finance will adapt to match the growth in your sales in that the more you invoice (via sales) the more cash you are able to access.
Support based on your business position
Similar to the above point, many traditional financing options will depend on your personal financial position as a business owner as well as your ability to provide property as security. Invoice financing is solely linked to your company’s sales, rather than your personal assets.
Invoice financing agreements can usually be reached faster than alternative financing methods like a bank loan. This means you will often have the initial portion of the invoice in your account within 24 hours of providing the information we require.
Easier to take on new business:
When companies know they aren’t at risk of late or missing payments, it becomes much easier to appoint them for new business contracts.