Invoice financing is a type of lending available to businesses large and small. In short, if your business relies on invoice payments to survive, then there is a high chance you will benefit from it. The way that it works is simple. You get a percentage of the value of your invoice upfront before the customer has paid, and the lender makes a fee once the customer pays the invoice.
In this article, we’re going to simplify the invoice financing process and show you how to use it to grow your business. You would be surprised at the difference consistent and measurable income makes when you want to buy more stock, hire staff, or invest in assets. Thankfully, invoice financing gives you the freedom to do all this and more.
Can my business benefit from invoice financing?
There are two quick questions you can ask yourself to answer this. One, do your customers pay you via invoice? Two, are you sick of waiting weeks or months before your invoices get paid? If you answered yes, then you’ll benefit from invoice financing. Imagine if each invoice raised was paid the next day. Well, with this finance, you no longer need to; this dream becomes a reality.
Rather than getting money in drips and drabs as the month continues, you can gather large sums the moment your invoice is raised. This makes cash flow consistent and measurable. Once you know what you have coming in, you know what you can set aside to invest back into your company.
How does invoice financing work?
A lender will look at the outstanding invoices that you need financing. At this point, the amount that you’re paid will depend on the lender and your requirements. You can be paid up to 95% of the value of an invoice, but in most instances, you’ll be offered 70-80% upfront.
The lender will transfer the agreed amount to you in a matter of minutes. After this, you will agree for your customer to pay their outstanding invoice into an account controlled by the lender. The lender will then take their fee and transfer you the outstanding balance.
Is invoice financing risky?
All lending has its risks. However, invoice financing is more secure than most forms of lending. This is because most lenders will borrow against your outstanding invoice. You will rarely be asked to put a charge on your company or personal assets as collateral. This alone is one of the most appealing aspects of invoice financing. Also, you know your customers. If you have an established relationship with them and you know they’re good payers, then this limits your risk.
Grow your business with invoice financing today
With the right lender and the right rates, invoice financing will transform your business. It will give you more cash to play with and allow you to pay off debts quicker. From small businesses with five-figure turnovers to large businesses with eight or nine figures, invoice financing can transform almost all businesses.
We work with our clients to find them a lender that offers the right value at the right rates. We save our clients time and money by ensuring that they are financed by a reputable lender. Contact us today by clicking here. Let’s grow your business together with consistent, measurable income.