Invoice finance, or factoring, is a financing solution that allows businesses to access funds by selling their outstanding invoices to a lender at a discounted rate. This guide will walk you through the process of invoice finance and provide key information to help you understand this financing option.
Invoice financing involves the following steps:
Improved cash flow: Invoice finance provides immediate access to funds tied up in unpaid invoices, allowing you to cover expenses, invest in growth or seize opportunities.
Credit control: If you use invoice factoring, you’ll benefit from the lender’s expertise in managing outstanding invoices and reducing payment delays. This input can save you valuable time and let you focus on managing other aspects of your business.
Flexibility: Invoice finance allows you to access funds as and when needed, depending on your cash flow requirements. The amount you can borrow grows in line with your sales.
It’s important to note that the specific terms, fees and processes can vary between lenders and depend on the type of invoice finance chosen (factoring or discounting). It’s advisable to thoroughly review the agreement and understand the costs and obligations involved before entering into an invoice finance arrangement.