The Benefits of an Invoice Finance Facility

The Benefits of an Invoice Finance Facility

Whatever industry or business you are in, one of the keys to your success is having the right tools to grow and nurture your business. A carpenter could not complete his job successfully without a saw, for instance, and for many small to medium-sized business owners, an invoice finance facility is a critical tool in their arsenal. Never heard of an Invoice finance facility – well, let’s change that.

What Is An Invoice Finance Facility?

Cash flow always has and will always be one of the most significant issues that any business owner faces. The business must pay their staff, rent, and other expenditures on time, but may not be paid by their customers promptly, which then starts off a domino effect that at its very worst can cause the company to go bankrupt through no fault of its own.

An Invoice Finance Facility provides a business with a safety net, and the way it operates is a relatively simple concept. A business owner signs up for an invoice finance product with a financial provider. At AW Capital, we have access to a wide range of providers, so this is something that we can assist with. Once the facility is in place, upon completion of any work that your company undertakes, you invoice the customer as usual but send a copy of the invoice to the finance company.

Depending on the agreement, you can receive up to 90percent payment for the invoice from the finance company. Then either you or the finance company will continue to pursue payment with the customer until payment is processed. When the payment is made in full, your business will receive the remainder of the balance owed, minus a service fee.

What Are The Main Advantages of An Invoice Finance Agreement?

The main benefit to any business of such an agreement is that they receive payments for the vast majority of their invoices within 48 hours rather than 30+ days. This helps a company with cash flow because that money is no longer tied up and can be utilised to grow the business. It might mean, for instance, that they do not need to take out an interest-bearing business loan or secure a loan by using their assets as collateral.

What Factors Do I Need To Consider When Evaluating If This Type of Facility Suits My Business?

When it comes to arranging invoice finance, there are a number of variables that separate the range of products on the marketplace. It is essential to understand these different options so that you can make an informed decision. Some companies will insist on running your entire business ledger via the invoice finance company, which some business owners may be uncomfortable with. Alternatively, other business owners might like the idea of moving all of the hassle of bill collection to the finance company, which could dramatically increase cash flow overnight.

It is also important to think about the relationship a company has with its customers. If the finance company is taking over the collection of payments, your customer will still consider your business to be their supplier. If the finance company is overly aggressive, in trying to collect a payment, it could damage the relationship between the business and their customer.

That is where the skills and knowledge of the staff at AW Capital come into play. We know which finance companies are good to work with, which companies will nurture that relationship while ensuring that all invoices are paid.

If you think that invoice finance is the solution to your business’s growth, then contact our friendly customer service team today on 0333 7726165 to discuss the various options available to you.

Benefits of an Invoice Finance Facility