What is invoice finance?
Invoice finance is a type of business financing that allows companies to borrow against the value of their outstanding invoices.
It is a form of asset-based financing that provides businesses with immediate access to cash, based on the value of their outstanding invoices, rather than having to wait for their customers to pay.
There are two primary types of invoice finance: factoring and invoice discounting.
Factoring
Is when a business sells its invoices to a factoring company, also known as a factor.
The factor pays the business a percentage of the value of the invoices, usually around 80-90%, upfront, and then collects payment from the customers directly.
The factor then pays the remaining balance, minus a fee, to the business.
Invoice discounting
Is when a business borrows against the value of its invoices but retains control over the collection process.
In this case, the business receives a percentage of the value of the invoices, usually around 80-90%, upfront, and then collects payment from the customers directly.
The business then repays the loan, plus interest and fees, to the lender.
Both types of invoice finance can provide businesses with immediate access to cash, improve cash flow, and reduce the risk of late or non-payment from customers. They can also free up time and resources that would otherwise be spent on managing and collecting outstanding invoices.
Invoice finance is typically used by businesses that have long payment cycles, as it provides immediate access to cash, rather than having to wait for payment from customers.
It can be particularly useful for businesses that are growing rapidly, as it provides a flexible source of financing that can be scaled up or down as needed.
If you’re a small or medium-sized business looking for funding, then why not contact The Funding Store today.
We do not charge broker fees, and with access to one of the most extensive and competitive lending panels in the UK, can bring you fast, flexible solutions that meet your finance needs.
The Funding Store can help guide you through the funding process and find the best funding options that fit your specific needs.
Whether you’re looking to start a new business, expand an existing one, or cover unexpected expenses, The Funding Store can help you achieve your financial goals.
So don’t hesitate, contact us today on 01908 880420, to take the first step towards securing the funding you need to grow and succeed.
Share This Story, Choose Your Platform!
This article has been produced by www.TheFundingStore.co.uk for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of the information contained in this article is accepted by The Funding Store Ltd. In all cases appropriate professional legal and financial advice should be sought before making a decision.
