Why Businesses Use Invoice Finance

Did you know that the Invoice Finance sector is one of the fastest-growing industries and is now a preferred funding solution due to its flexibility and speed?

Invoice finance is a compatible match for businesses that endure long payment terms with customers.  When a customer defaults on a payment or takes too long to pay, it can create a financial dent in your cash flow, making it impossible for you to make ends meet and keep your business afloat.

At factoring companies such as Populous World, invoice finance is a fast, flexible and transparent way to bridge cashflow shortfalls and maintain positive financial health.  

If your business is new to invoice finance, here are a few key facts to help you get started:

1. How does Invoice Finance differ from traditional lending methods?

Businesses typically gravitate towards traditional forms of lending such as banks, and overdrafts are one of the most well-known routes to finance available and frequently the option that business owners consider first. This is because they are quick and easy to set up if there’s no charge over freehold property. However, they must be formally arranged in advance to avoid a penalty.

Every business circumstance is different, and depending on that will determine whether you are more suited to an overdraft or invoice finance facility.  By way of an example, if your business is growing at a fast pace and experiencing large volumes of orders, then invoice finance compliments that growth, as the method grows with your business.  If you can’t keep up with the pace of unexpected growth and need to release cash quicker than customers take to pay you, then invoice finance is compatible with your business.  

2. Accelerate your operations and performance

When you have cash in the bank, it makes running a business that bit easier.  Rather than sleepless nights worrying about how you will meet staff payments, overheads, fixed costs and daily operation costs, you will have cash ready for any essential overheads.  Not having the financial stress on your hands will increase the performance and efficiency of not only yourself, but your workers too.   

3. Sustain and Grow

Invoice finance can help you to make the most out of your cash flow and keep your business running.  The availability of cash allows you to worry less about day-to-day operations and frees up your time to focus on investment opportunities, new projects and fulfill growth plans.  Whether you are offering a product or service, invoice finance will allow you to have the cash you need to buy new stock, pay suppliers, meet customer demands or purchase new equipment. 

4. Invoice Discounting vs Invoice Factoring

There are two broad types of invoice financing in the UK — factoring and invoice discounting. They both release cash to your business account in the same way, the difference after being that factoring usually involves an invoice financier managing a company’s sales ledger and collecting money owed by customers themselves, whereas discounting means the invoice financier won’t manage the company’s sales ledger or collect debts on the company’s behalf.

5. Long-term advantages

Invoice factoring services for small businesses has many rewarding advantages, which helps entrepreneurs to acquire fundamental working capital for optimal company growth and expansion, especially for businesses that require steady cash flow.

Some of the inherent benefits of invoice factoring include quick and simple access to cash, reducing the risk of late payments and bad debts, affordable factoring fees, and flexible financing terms. Most SMEs choose to sell their invoices on a regular basis, thereby improving cash flow, providing predictability, and strengthening their position to take on new opportunities.


>> 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.

For more information, visit us or contact a member of our funding team: [email protected]


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