The Benefits of Invoice Finance | Best Invoice Finance Company
The Benefits of Invoice Finance enables you to do this by releasing cash tied up in outstanding invoices, giving your business an immediate cash injection and on-going supply of cash that grows in line with your sales. Whether you are a small start up business struggling with working capital, or a larger organisation looking for a cash boost to fund expansion plans. If you are trading on credit terms within the business to business marketplace, then Invoice finance is for you and your business, so lets look at the benefits of Invoice Finance.
Is ideal for smaller businesses without an established accounts team or those who want the benefits of a funding and collections service. As well as providing the finance, the funder will manage your credit control, chasing and collecting outstanding invoice payments on your behalf, turnover usually starting at about £50,000. Invoice Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs. It might also factor their invoices to mitigate credit risk. Factoring is commonly referred to as accounts receivable factoring, invoice factoring and sometimes erroneously accounts receivable financing. Accounts receivable financing is a term more accurately used to describe a form of asset-based lending (ABL) using a company’s accounts receivable as collateral.
Is a funding only solution more suited to businesses with a credit control function in-house. The funder provides the finance, but you remain in control of collecting payments.
Key Benefits of Invoice Finance
Quickly unlock cash due to the business, no extra funding or loss in equity.
A secure form of finance as the sales ledger is used to secure access to funds.
Improve your profit-paying suppliers early lets you buy in larger quantities and take advantage of any volume discounts available.
How does it work
- You simply send your invoice to your customer and a copy to the invoice funder.
- Factoring facility – The invoice funder will undertake credit control on your behalf.
- Discounting facility – You chase payment of the invoice and your customer makes payment into a dedicated client business account which is controlled by the funder.
- On receipt of your invoice, the funder will advance an agreed percentage of the value (generally within 24 hours)
- Once customer pays in full, the remaining percentage is returned to you minus a fee.
What it costs
Fees are based on the level of support required and when compared with other sources of finance, Invoice Finance can be a cost effective way to fund your business usually cheaper than an overdraft. Some funders have additional fees, known as disbursements. It is important to be aware of when these fees will apply as this could increase the cost of your facility significantly. But it can also save you.
Selective Invoice Finance
Unlike ”whole turnover” financing, Selective Invoice Finance allows you to choose which invoices or debtors should be put forward for funding. You can then choose when and how much you wish to draw from the selected invoices so only fund your slow payers, you are only charged a percentage on the monies drawn, calculated daily.
This is a great option if you are looking for flexibility as you are not tied to a contract and can dip in and out of the facility.
When considering whether the above is right for your business it is very important to understand how the facility will work once up and running.
At Invoice Funding we have a team of consultants who specialist in invoice finance. The funding brokers can explain the process and search the market on your behalf to secure the best facility for your business needs. please feel free to complete the online enquiry from on our website and to understand the benefits of Invoice Finance and one of the team will contact you.