Invoice financing allows you to boost your cash flow through raising a sum of capital that can be reinvested into your business within a matter of minutes, and ultimately transforming the 30, 60 or even 90 day waits businesses commonly face with invoicing.
In this article, Forbes Burton is here to provide you with the benefits of Invoice Financing and how the process actually works.
How Does It Work?
As you begin to increase your sale invoices and send them to your clients, you simply provide a copy to your invoice finance provider who can make a payment of up to 90% of the invoice value immediately.
Alongside this benefit, you also don’t need to chase the client for any form of payment, as the invoice finance provider will do all of this for you.
As stated above, this means you no longer have to cope with the long and drawn out payment times. Instead, you will have your payments given to you within a 24 to 48 hour time period of your invoice being raised.
This means that you effectively have your earned cash on delivery for you, whilst you still offer your normal credit terms to your customer.
With invoice factoring, you will find three different types, which are –
Factoring is where you continue to raise and dispatch invoices in the usual way you would, and send a copy to your factoring company.
On receipt, your factor will then have available funds of up to 90% of the value, and these must be used immediately.
When your client then decides to pay you, any outstanding payment will then be paid to you, minus the charges for the use of the facility.
The factoring company in question will then control your sales ledger for you and carry out the credit control, all on your behalf, which helps remove the commonly, time-consuming task of trying to chase your customers for the needed payment.
Instead, you can focus on the most important aspect, which is your business.
Spot Factoring (Selective Invoice Finance)
Spot Factoring (also referred to as Selective Invoice Finance) provides you with the flexibility to choose which invoices you would like to use to raise the working capital your company requires.
Also, with Spot Factoring, there is no minimum contract period, so you can use this service as frequently as you need, or just as a one time requirement, to help meet the cash flow status your business needs and deserves.
Any invoice which is funded will be firstly sent to the Spot Factor, where they will make a payment of up to 90%.
The process of Invoice Discounting works the exact same as Factoring, in terms of that you can draw money against your invoices in advance of your customer payment. But, the difference with Invoice Discounting, is that you retain the credit control process in house and you continue to handle the process yourselves, without external help.
This process is commonly complete through a confidential basis, which means your clients are unaware of how your business is being financed.
Back To Invoice Financing – Here Is An Overview
- Invoice Financing allows you to receive the payment you require (from up to 90%) within just a 24 hour time frame. Plus, you don’t need to wait for your invoices to clear to receive your payment.
- It helps you maintain your working capital that you can access, as it becomes tied up in invoices.
- We recommend that you take advantage of the professional sales ledger management, as a fully qualified professional client manager can handle this process for you, which means you don’t need to further employ in house, as your finance queries can remain separate to your business environment.
- Using Invoice Financing lets you stay away from the threats of having bad debt upon your business, as you receive credit protection that can guard you away from late or non paid invoices.
If you decide to set this up for your business, all you need to do is send over any raised invoices and your provider will give you funding, which helps make the bain of day-to-day finance commitments a thing of the past.
Whenever invoices are due, they are simply collected on your behalf from customers, from an external finance expert, so you can keep your main focus on the success of your business.
Every business deserves the money they earn through customers, and late or non existent payments should not be something any business should face.
Find the help you need and make the fear of invoicing disappear today.