Which product would be best for my business? It can be a very cheap way to borrow money for your business.Invoice finance can only be secured on your sales ledger, meaning you don’t have to tie up other assets.Funding can be raised quickly when cash flow becomes an issue.Providers of invoice finance are always available to offer sensible advice to help your business and will be able to advise quickly due to their ongoing relationship with your company.The level of finance available increases as your business grows.Invoice finance allows you to release up to 90% of the value of your invoices on day one, meaning you no longer need to wait 90 days for payment from suppliers.There are numerous benefits to choosing invoice finance – here are six for you to consider: What are the benefits of invoice finance? Poor performance in this area may lead to lenders refusing to offer an invoice discounting facility and offering only factoring as management of the debtor book is crucial to ensuring that all invoices are paid as due. As such, these facilities are completely confidential.ĭue to the reduced level of control, funders will want to ensure that the businesses credit control systems are robust and can be relied upon to manage the debtor book. This means that there is no need to inform them of any third-party involvement, and payment is made directly to you. With invoice discounting, the client retains control of credit control and the sales ledger, and simply borrows the money from the provider, meaning you will continue to invoice them directly. Payment of invoices is made directly to the factoring company.Īs the facility is managed more heavily by the funder, the increased management cost is passed on to you, meaning it may be more expensive than invoice discounting.įactoring tends to be most commonly taken on by smaller businesses, usually with turnover of £250,000 or less. With invoice factoring, the lender will provide the funds required and take control of the management of the sales ledger, credit control and any actions regarding unpaid or late payments.Īs a result of this, your customers will be dealing directly with your invoice finance provider, so will clearly know of their involvement. How do invoice factoring and invoice discounting differ? This is then repaid when the invoice is settled, minus any fees and interest, with the balance going to your business. Invoice finance is a term that’s used to cover both factoring and discounting, and regardless of the type used, it works in a certain way.Īs invoices are raised, your invoice finance provider pays you a proportion of the invoice straightaway.
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