The Perks of Invoice Finance
Invoice discounting, otherwise known as invoice finance is used by businesses to allow them to raise finances using the value of their sales ledger as collateral. Some lenders will lend businesses as much as 100% of sales ledger value. With some cases of invoice finance, if the customer does not pay the invoice then the lender with turn to you to pay it, other lenders will take all the responsibility for the bad debts and cannot reclaim the money from you if the customer doesn't pay.
What are the advantages of invoice finance? For, starters it can be a cost-effective way to outsource your sales ledger, which gives you more time to concentrate on the more important aspects of your business.
Invoice financing frees up the money within your outstanding invoices therefore improving your cash flow. Some lenders will credit check your customers, which gives you a better insight of their company. Some customers may pay more quickly if they know an invoice finance company is involved.
When to Use Invoice Finance
Do your clients require 30 60 or 90 days to pay their invoices? This will be the case with many companies so you will al know what a strain it can be. If you have a lot of spare money just sitting in the bank then you will be ok, but not many businesses do. You have to pay your suppliers and wages so without money this is impossible. If you are a small business this can affect your business being able to grow and expand.
If you are having this problem then you do have a few options. You can apply for a bank loan, but these are not easy to be approved for and can take a long time. Your other option is invoice finance. Invoice finance works by you selling your outstanding invoices to a company who will then give you up to 80% of the total. Once you have given your invoices it is down to the invoice finance company to collect the money.
Helping Out Small Businesses
Almost every business throughout some point of them trading will need some form of help with financing to allow them to grow and progress to the next level. This is especially important for small businesses Finding the right type can be the difference between the business succeeding or failing. One of the main reasons small businesses need help with money is because they are struggling with cash flow problems. This is normally because their clients request to be given 30 to 60 days to pay their invoices. So this is a vicious circle as the company will dip into their savings to cover costs until they are paid, but then this happens all over again. And being a small business the amount of cash you have in your reserves won't be much.
A way to fix these issues is to look into invoice finance. Invoice finance is a great solution to any business but especially small businesses. It works by you selling your outstanding invoice to one of these companies and then you receive around 80% of the total amount.
Options with Invoice Finance
When you own a business you know how hard it is to make payments on time as well as getting your clients to pay on time. This doesn't have to be a hassle any more as there are things out there to help you. One of these things are invoice finance. Invoice finance allows you to have your money within 2 weeks instead of waiting for 30 to 60 days. If you are a small business you will know the faster you get paid the better.
These invoice finance companies are there to help businesses who cannot wait for their invoices to be paid as they have their own expenses that need to be paid. There are many positives that come with working with a invoice finance. You will receive the money you need to pay off your bills and this will also allow your business to grow and develop.