How important is your business’ cashflow?

posted by 4 years ago in Guide

During the last month of the year, it is common for festivities, holidays and a lack of business routine to get in the way of clients settling their invoices.

Did you know that 6 in 10 invoices are paid late during the festive season?

If this is causes your business problems, then using invoice finance could be a step in the right direction for you and your business.

Could using invoice finance help your business?

  • Using invoice finance allows businesses to access money that they are owed without the delay of their clients. This means your business plans won’t suffer because most invoice finance companies will put the amount into your account within 24 hours!
  • It’s not a long-term payback scheme, invoice finance is classed as a short-term method of lending.
  • There are two types of invoice finance; Invoice Factoring and Invoice Discounting. They are fairly similar however there is a significant difference between them. With factoring, the lender will take the responsibility of collecting the payments on the invoice whereas discounting allows the company to stay in control of the full process. It also allows them to collect the payments themselves – this means that your client would never have to know that you have used invoice finance.
  • The structure of the pricing is very clear – the lender will advance most of the value of the invoice, this is typically 85/90%. The pre-arranged fee is charged once however, there will be a monthly interest fee and a charge based on how much money has been borrowed.

It’s worth gathering all of the information to find out if invoice financing is the right option for you.