What is Invoice Finance?
One of the most significant issues every business owner faces is that of cash flow. Simply put, not all customers pay promptly, regardless of the agreed payment terms. Without positive cash flow, it can be challenging to keep any business afloat through no fault of the company owner. Invoice finance is designed to solve this all too common problem. Finance providers can offer business owners an invoice finance facility, which allows them to leverage their unpaid invoices. By utilising this facility, business owners can receive access to up to 90 per cent of the money they are owed, which helps resolve cash flow challenges the company might be facing.
Once the clients pay the invoices, the lender will release the remaining money owed, minus their fees and charges. There are often various options available to the business owner, which are dependent on factors such as the situation they are in and the level of control they need in collecting unpaid invoices. Another term used for invoice financing is accounts receivable financing; these terms are interchangeable and are identical.
What Are The Key Benefits of Invoice Financing?
Invoice financing is an increasingly popular option for small and medium-sized businesses as it allows any company to use earned income tied up in unpaid invoices as collateral for financing. Using this strategy, companies can improve cash flow to ensure the smooth running of the business and increase the speed of their expansion or investment options. It also allows them to take advantage of time-limited opportunities that require a cash investment. Another key benefit to invoice financing is that it can often be structured in a discrete manner to avoid any disruption to the company’s customers. Additionally, the lender can also explicitly manage it, reducing the administrative burden and hassle from their customer.
How Is Invoice Financing Structured?
As with all financial products, different types of invoice finance are available to businesses looking to take advantage of this facility. Upon signing the agreement, the finance company will pay their client between 60 and 90 per cent of the value of their outstanding invoices. As and when the finance company receives full payment for the invoices, the remaining percentage will be returned to their customer along with a charge for that service and or interest.
If you are fed up with the stress and hassle of chasing unpaid invoices or are searching for the best option for ensuring positive and regular cash flow into your business, then an invoice finance facility might be the perfect answer. AW Capital has many years of experience within invoice financing and has access to a wide range of invoice finance providers.
To book a friendly and informal discussion with one of our invoice finance specialists, call us today on 03337726165