What is Invoice Finance?
Invoice Finance is a lending solution that can also be known as invoice discounting, invoice factoring or spot factoring. It allows businesses to access cash owed much quicker. With Invoice Finance money owed can be made available within 48-hours of work being completed, rather than having to wait the full 30+ days for payment from customers.
How does it work?
A business will provide their goods or services to their customers and then invoice then accordingly. When the invoice is sent a copy is also sent to the Invoice Finance provider, who will then arrange for a pre-determined percentage of the face value of the invoice to be paid to you. When the final payment arrives from the debtor, the remainder of the invoice value is paid along with the associated Invoice Finance service fees.
What are the advantages?
The one clear advantage of Invoice Finance is the immediate boost in cash flow for businesses. Alongside this, is the ability to fund business growth based on orders confirmed rather than taking on extra liabilities or debt through business loans.
Who can benefit from it?
All types of companies can use Invoice Finance. It is a particularly good solution for companies that are fulfilling temporary contracts where an increase in labour is required and salaries have to be paid on a weekly basis. Something often overlooked is the administration efficiency that Invoice Finance brings. By implementing a facility it means that you have to stay on top of your administration and once the process is in place you can benefit from a more streamlined and effective solution.
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