Release the cash in your unpaid invoices Invoice Finance solutions
Cash-flow finance allows you to release the money that you have locked up in your unpaid invoices, enabling you to grow your business. Generating additional sales and hopefully greater profits alone is unlikely to help a business expand and meet demand. Indeed, further factors have to be taken into consideration such as the demands on your cash-flow and working capital.
Increased orders for your goods and services will create pressure in other areas, you may need to purchase more stock, order more raw materials or employ additional staff. It is likely that all these costs will have to be met before you get paid by your customers.
Unlike a traditional bank overdraft facility (which is for a fixed sum), Invoice Finance will grow in line with your sales (because each invoice is individually financed as you raise it).
So how does cash-flow finance work?
Your business supplies goods or services to your customer
You raise your sales invoice for the supply of those goods or services
Copies of your invoices are provided to the cash-flow funder (these are normally only required if an invoice is over a certain pre- agreed value).
The invoice finance provider advances you a percentage of the value of each invoice raised (typically 80-90%)
The balance of your invoice is paid to you (less any fees and interest charges), once your customer settles the invoice
Invoice Finance is more frequently referred to as Factoring or Invoice Discounting, they are similar (in that they provide cash against your unpaid invoices) but there are some key differences.
Primarily, with factoring the factor (the lender) collects the customer payments on your behalf, whereas with Invoice Discounting you maintain the relationship with your customers and handle your own credit control. Factoring is typically better for small and growing businesses (to include new start-ups), or those businesses that perhaps do not have their own credit control department.