Is your business looking for a form of financing that can improve your company’s cash flow without going into debt? That doesn’t require giving up ownership or control of your business? That gives you immediate access to cash even if your business is new or has no collateral and grows with your sales?
Invoice factoring is an alternative funding method. It relies on outstanding invoices rather than a business’s credit history. An invoice factoring company purchases a small-medium business’s unpaid invoices (accounts receivable) at a discounted rate. This puts the focus on customers’ ability to pay rather than on the business.
This method of funding is not new but somehow is not particularly well known to most businesses. In some industries, preferably ones with notoriously long payment cycles, it’s long been the preferred form of financing.
Today, there are many innovative invoice factoring providers that offers funding to meet the needs of your facility.
How does it work?
Your company sells a product or service to a customer and issues an invoice. It typically takes between 30 and 60 days for the customer to pay you. In order to gain instant cash advance, you sell the invoice to a factoring company.
For business owners, there are three points to consider before using Invoice Factoring:
1. Invoice Factoring offers a better combination of availability, speed, flexibility and services than any other form of financing. It creates opportunities for a level of growth that isn’t otherwise possible.
2. The large majority of factoring is non-recourse. That means there’s nothing to pay back later–unless there’s evidence of fraud–even if the customer never pays the factor. The advance is yours to keep.
3. Most companies offer a 2 percent discount for payment in 10 days or less. This cost is not annualized because it’s never more than the discount. Likewise, factoring fees aren’t annualized because they don’t exceed the difference between the advanced amount and the invoice face value.
>> 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.