Many businesses experience cash flow problems even though they are making plenty of sales and profits are good. The time taken to receive payment after an invoice has been issued can cause problems and may mean a company will start to lose control of many aspects of the day to day operational costs of their business.
Cash flow problems create difficulties. Not knowing how much access you have to liquid cash on a day to day basis may mean facing uncertainties around when and how your company can meet its operating costs. This will in turn reduce the ability to plan ahead, to invest and to make the most of those growth opportunities.
The faster you receive payment from your invoices the bigger the operating cash inflows will be and the easier it is to take back control of your business.
This is where invoice financing can help.
Invoice financing is an alternative way of raising cash and can be an ideal way to raise finance for businesses that have a high cost of sales, are seasonal in their operations or just have to wait a long time to be paid.
You borrow money from a finance provider using your unpaid invoices as leverage ensuring that instead of waiting to receive payment from your customers you receive the money straight away with a fee charged for the service - and there are obviously many benefits to receiving cash from sales quickly. Receiving the cash early allows you to now be in control of cash flow enabling you to stay in control of ongoing operational costs and future plans to make the most of any growth opportunities.
Invoice financing offers many options and the one your business chooses will depend on your situation and how much you want the finance provider to be involved.
How does it work?
You will receive up to 90% of the value of the invoice in cash almost straight away with the rest received on full payment of the invoice. You can control your own sales ledger or get the finance company to chase up payments for you. If you prefer, your customers don’t ever need to know you are financing this way and there are options available to make sure they only ever think they are dealing with you.
Invoice financing means you receive a steady flow of cash at the right time enabling you to remain in control of maintaining and growing your business.