When it comes to working capital for your small business, it’s rare that one option will suit all of your business financing needs. To get suitable funding that is right for your business, a smart and flexible financing solution can often be the best route.
If you interested in exploring invoice financing, also known as accounts receivable financing, you might need another type of business loan to cover your bases.
It can be tricky figuring out which financing combo is best. Depending on your company’s industry and financial situation, one of the following four could work well for you and your business.
Is Invoice Financing right for your business?
Invoice financing is a great option if you have cash locked in unpaid invoices. It may be the right funding method when you have outstanding accounts receivables and need working capital to run the business. It is particularly a faster way to obtain cash compared to the traditional process of a bank loan, which can take a while.
A business should take into account that the invoice financier will charge a fee, typically around 3% plus a percentage each week your customer doesn’t pay up. The fees are dependent on which invoice finance company you choose to adopt, but you will get 80-95% of the total invoice amount upfront (with the remaining paid upon retrieval, minus fees).
Invoice financing can be an effective financing option for your business because it can fill the void when customers don’t pay on time. Invoice financing provides a reliable and consistent flow of cash, ensuring your business remains operative, even if customers don’t always pay on time.
All types of business loans have their advantages and disadvantages. But when we consider that 64% of small businesses have unpaid invoices that are at least two months old, it’s easy to conclude why invoice financing can offer businesses a way to stay cash-flow positive.
When invoice financing is applied to your business, you can solve most of your working capital needs, allowing you to then focus on driving your business growth.
>> 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.