What is Invoice Finance?
Invoice Finance offers a flexible alternative to get funds flowing into your business without having to wait for your customers to pay you. It releases some of the value of your invoices as cash and so removes the need for you to make use of any business banking overdraft facilities you may have in place.
The benefits of using Invoice Finance
Releases cash into your business
Provides payment of up to 90% of the value of your invoices
Makes cash available within 24 hours of raising your invoice
- Makes cashflow management easier
Means you can negotiate early payment discounts with your suppliers
Invoice Finance solutions
If you don't have the resources and information systems in place to collect payment for your business invoices you could consider outsourcing this to an invoice factoring services provider.
The factoring services company will issue invoices to your customers and provide you with credit control and payment collection services. You send all your business invoices to the factor who will pay you between 80 and 90% of the invoice amount within an agreed time frame (can be as little as 24 hours). When your customer pays the factorng company they'll deduct their charges before making a final balancing payment to you. Bad debt provision is sometimes available but may incur additional charges.
If you use an invoice discounting service you issue your invoices directly to your customers and send a copy to the discounting provider. They'd pay you a certain percentage of your invoices when they received them (within the agreed timeframe) and pay the balance minus their fee once the customer has paid in full.
With invoice discounting you maintain the relationship and contact with your customers. The main advantage is that the arrangement is confidential between you and the discounting service provider, but you still benefit from guaranteed payment of your invoices.