• Are you trying to grow your business?
• Do you seem to be spending more time and effort collecting the money you are owed?
• Is more and more of your cash becoming tied up with your outstanding sales invoices?
• Having problems with late payments from your customers?
If your sales ledger is healthy but your cash flow is tight, you may have been looking for ways to create a cash injection of working capital. You may already have tried to source the funding you need through the usual avenues e.g. business loans or overdrafts, or you may use invoice financing but are having funding issues with your existing provider. If you sell to other businesses and you are invoicing them in arrears and imposing payment terms (e.g. 30 days) invoice finance can help you.
Most businesses think of debts as liabilities. However, debts owed to your business are assets, so why not use those assets and:
• Release cash tied up in these outstanding invoices
• Improve your cashflow
• Let your invoice finance provider take on the burden of chasing your customers for payment
• Free up valuable management time
• Get on with running your business.
Invoice financing is flexible and can suit almost any business, from start-ups looking to establish themselves, fast-growing companies looking to expand, or larger companies looking to fund major transactions such as mergers or acquisitions.
There are two types of invoice financing - factoring and invoice discounting. Both require you to send a copy of your customer sales invoice to the invoice financing provider. On receipt of this (and for a small fee), your provider will release up to 85% of the invoice value to you within 24 hours.
• If you have chosen invoice discounting, you will then be responsible for chasing payment of the invoice and collecting the money, which you then pay into a dedicated trust account.
• If you have chosen factoring, your factoring provider will carry out all the credit control functions and cash collection on your behalf. This includes issuing statements and chasing customers until the outstanding invoices are paid.
On payment your invoice finance provider will then pay the remaining invoice value to you.
Invoice financing can be openly disclosed to your customers, or it can be confidential so that your customers are not aware of how you are funding your business.