Funding Bay Blog

How Your Business Can Benefit from Invoice Financing

How your business can benefit from invoice financing?

Invoicing finance allows businesses to release the cash tied up in your unpaid invoices. Invoice finance is one of the best ways to ease cash flow problems and get paid faster for completed work if you are a business that regularly invoices other businesses on credit terms, is invoice finance. In simple terms: rather than waiting days or weeks for invoices that you are owed by customers, invoice finance gets you the cash immediately so you don’t have to wait to get paid.

How does it work?

There are a few different types of invoice finance from Confidential Invoice Discounting to Factoring, to Selective Invoice Finance. Ultimately, whichever product you use, the destination (IE; free up cash tied up in unpaid invoices) is the same, it is the journey that is slightly different depending on the product.

As an example; If you provide workers to the council and raise invoices at the end of each week. Your workers need to pay every Friday, but the council pays you every month, clearly, you are going to have negative cash flow. Invoice finance providers will give you up to 90% of the weekly invoices upfront, meaning that you can afford to pay your workers. At the end of the month, you receive the 10% net of the small fee.

What are the benefits of invoice financing

Simply, this is a way of increasing your cash flow. For a small cost, you are no longer at the mercy of lengthy payment terms, you can release the cash tied up in their invoices on delivery of goods or services.

Credit Control: Factoring (but not invoice discounting) facilities often take care of the credit control function, removing the hassle for the business.

Flexibility: With selective facilities, there is a flexibility that allows businesses to include as many or few customers within the facility that they wish.

Speed: The funding is available quickly. Once the arrangement is in place, the funds can often be released from an invoice within 24 hours

Amount: The amount you can borrow grows in line with your business. The credit lines in based on the value and quantity of your invoices so the amount of funding you can access increases in line with your revenue.

Invoice Finance Products

There are multiple products that achieve the goal of freeing up the cash tied up in your unpaid invoices. Funding Bay work with a panel of over 200 lenders, each of which varies on their financial products. We have got more than 25 different providers of invoice finance. All with slightly different approaches and slightly different product niches and qualifying criteria. If you are a B2B business that sells on payment terms, there should be a product for you.

The major invoice finance products we specialise in are:

Confidential Invoice Discounting

Fund your entire sales ledger without your debtors knowing you have a facility in place. A flexible facility that is usually for businesses that are profitable and have a good strong trading track record. Blue chip and high-caliber customers are a must.

Invoice Factoring

Factoring is where your funder mirrors your sales ledger on their systems. The factoring company takes care of the entire collections process and management of your sales ledger, providing both fundings against your receivables and outsourced credit control.

Selective Invoice Finance

Pick and choose the invoices from within your sales ledger to fund against. Perfect for businesses with suddenly larger orders, a seasonal requirement for cash, or only sporadic cash requirements.

Our panel of specialised invoice finance lenders includes high street banks such as Lloyds, through to larger independents like IGF, Ultimate Finance, and Bibby through to the niche independents like Advantedge, Nucleus, and Pulse Cashflow and fintechs like Market Finance and Satago, to name a few. To find out more about invoice finance, and to get your application going, get in contact with one of our team here.

Invoice Finance Calculator

Our Invoice Finance Calculator is easy to use and takes just seconds to learn how much it will cost you to free up your future cashflow.

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Further Reading