Invoice finance helps businesses to improve their cashflow by releasing money that’s tied up in invoices for goods or services sold on credit terms.
In simple terms, it works like this:
The benefit to you is that you don’t have to wait for the customer to pay before enjoying the benefit of the cash. This provides valuable working capital you can use to pay your staff or suppliers, without having to wait for the 30 days.
There are different types of invoice finance, and different names by which it is known. These include invoice factoring, invoice discounting, debt factoring, accounts receivable factoring, selective invoice discounting and spot factoring.
The principle behind each of these options and names is the same. As a result, you get paid faster and have more working capital available.
When considering invoice finance, you should pay attention to:
Some invoice finance providers will want to manage your credit control process. This puts experienced credit controllers to work on your behalf. While the credit control process is usually managed with discretion, meaning that your customers are unaware of the finance provider’s involvement, you need to consider how this could affect your relationship with your customers.
By putting additional working capital into your business through invoice finance, you can:
Credit terms of up to 120 days are not unusual. Invoice finance helps provide the funds you need to bridge that gap.
There are many different finance providers in the marketplace, offering differing forms of invoice finance. Each provider has their own criteria, terms and preferred markets.
It can be difficult for a business that’s unfamiliar with all these providers to find the option that’s right for them.
Invoice finance brokers, like JD Capital Finance, help businesses to quickly find the provider and arrangement that’s most appropriate for their needs.
We know what finance deals are available today, and we know what’s worked well for other businesses like yours. This allows us to match you quickly with a finance provider, and to help you through the application process.
If you think invoice finance might be right for your business, get in touch with us today.