Invoice finance, involves two types of sources; invoice discounting or factoring and is an alternative financial product that releases working capital against a company’s outstanding receivables.
Invoice finance can often be the product of choice for many companies from small start-up firms to establish multi-national companies. Although, in general it is small to medium companies that gain the most benefit.
In simple terms, invoice financing allows a business to receive a larger percentage, typically 80–90% of the money owed to them by customers within 24 hours of submitting an invoice. The invoice financial advance for a company then remits a further percentage of the invoice, typically 10–15%, after the invoice has been resolved.
Qualifying for invoice financing is relatively easy compared to traditional methods. There are, however, a few essential requirements. One requirement is that your company must sell goods or services to other businesses on terms. Another requirement is to have account receivables from creditworthy clients.
4 benefits which this product brings are rewarding:
Cash Flow The first and most obvious benefit provides access to cash. The flood gates of opportunity can well and truly open with enhanced business cash flow. Numerous companies use increased financial liquidity to pay suppliers early, buy stock at an attractive price and bridge the gap between completed work and the date of their invoice payment.
Credit Insight All companies providing their clients with invoice finance also give access to invaluable information about the clients’ customers, allowing them to make informed decisions about levels of trade and credit.
Bad Debt Protection Many invoice financiers offer bad debt protection, which offers the client financial protection against any of their customers going bust.
Credit Control This benefit comes only when you operate a factoring facility which gives you the opportunity to allow your factor to carry out collections on your behalf. This frees up much needed time and would usually be at as little as half the cost of employing a credit controller.
>> Is your business in need of fast, short-term financing? Do you need to access cash faster than your customers pay you?
Populous World is an Invoice Finance provider that unlocks working capital for UK businesses.
Bridging your business’s cash flow gap is something that Populous World excels in delivering, providing you with the funding tools to grow and sustain your business.