If you regularly invoice your customers, you’ll know how frustrating it can be waiting for payment, especially if you have to spend time chasing payments each month. Invoice finance can be a helpful and flexible way to relieve your financial situation, while waiting for your customers to pay their outstanding invoices.
At Able Commercial Finance, we can help you find the right finance solution for your business. Here we look at how invoice finance could help.
What is invoice finance?
Invoice finance is a way of borrowing money based on what your customers owe your business. It’s a flexible finance solution that allows you to release any cash that is tied up in outstanding invoices, so you don’t have to wait as long for payment.
Invoice finance is a type of asset-backed solution that is suitable for different types of businesses, small or large, that regularly issue invoices for goods or services to other businesses. Currently, invoice finance is not regulated by the FCA, and so it’s important to be aware of your choice of lender. This is where we can help.
Why choose invoice finance?
Businesses of all types and sizes will no doubt need some form of financial support during its lifespan. A company may use invoice finance in order to free up capital for growth and investment, which could be crucial for the business’ future success. The business uses unpaid invoices as collateral, providing a low-risk and short-term borrowing solution.
So, rather than waiting weeks to be paid, invoice finance can provide you with the cash you need. Here are some of the advantages of choosing invoice finance.
Ease cashflow
Invoice finance can give you access to payment faster, freeing up cash in your business to use for things like buying stock or investing in assets. It’s a helpful way to ease cashflow, reducing the risk of late payments and making sure your business can move forward.
Access to payment faster
Invoice finance means a lender can provide your business with a cash advance, equal to a percentage of the invoice value. It is a quick way to unlock cash in your business so that you can pay for expenses, instead of waiting weeks or months to receive payment for the invoice from the customer.
Choose the method that suits you
There are two types of invoice finance: factoring and invoice discounting, each with its own features and benefits. Invoice factoring involves the business selling unpaid invoices to a lender for a percentage of their value. The lender takes responsibility for collecting the payment. This means the customer will know you are using some form of invoice finance, but it can free up your time as you no longer have to chase the customer to pay.
Invoice discounting also includes selling unpaid invoices to a lender, who will give you a cash advance that equals a percentage of the total invoice. Once the customer has paid, the lender will give you the remaining balance minus their fee for their service. The customer does not know you’re using a finance provider in this circumstance.
If invoice finance sounds like it could help your business with cashflow, don’t hesitate to get in touch today to find out more. The team at Able Commercial Finance are here to offer expert advice and match you with a suitable lender for your needs.
