In certain situations, and often without knowing it, a business can find themselves subsidising other businesses. This might sound strange but is actually quite common.
For example, if Client A provides services to Client B for a value of £10,000, Client B will have set payment terms to all suppliers of 90 days. However, they expect payment from their customers within 14 days. This means that for 76 days Client B has the benefit of cash within their business up until they have to pay Client A’s invoice. This is great scenario for Client B but could be quite difficult for Client A.
In this situation Client A are unknowingly lending money to their client, providing the same provision as a bank or lender but without the added benefits of generating interest on this very short-term loan. Also, affecting their business cash flow.
The simple answer to stop this from happening is Invoice Finance. Invoice Finance can fill the gap between an invoice being issued and payment being received. For example, if Client A sets up an invoice finance facility, they can benefit from receiving any money owed within 48-hours of the work being completed and the invoice being issued. Then when Client B pays their invoice, they can then settle the invoice finance provision.
Invoice Finance can stop businesses from inadvertently acting as a money lender to its clients. Instead boosting their own cash flow and continue to grow their business.
If you have any questions or need to discuss anything relating to Invoice Finance, please call us on 01993 706403 or e-mail firstname.lastname@example.org.