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Does your business need invoice discounting?

When should your business start to think about using invoice discounting services? With all the finance options out there, as well as the unavailability of bank loans and overdrafts for many businesses, it’s worth having all your facts straight. Invoice discounting can be useful if:

You need capital quickly

Invoice discounting can release up to 90% of the value of invoices within 24 hours. Unlike lengthy bank application processes, your factoring lender will make funds more accessible much more quickly.

You need to improve cash flow

Cash flow is the lifeblood of any SME. You won’t be able to grow your business without adequate cash flow, but you need funds to ensure this growth. Invoice discounting can inject cash flow into your business without high interest rates from short term longs. It’s flexible, fast and secure.

You want to collect your own customer payments

Unlike factoring, invoice discounting lets your company stay in control of credit collection duties. For this reason, it is most often used by medium sized businesses who want to remain discrete about their use of invoice finance. This will also make sure you’re in control of your customer relationships, a valuable part of customer services.

You have an established credit control process

As you’ll be collecting your own customer payments, businesses will need to have established processes for dealing with customers. Invoice discounting is suited to companies with established infrastructure for invoicing or even a dedicated finance department. You won’t need help with your invoicing procedures, but you will want to benefit from quick cash injections from invoice discounting.

You want short term financing with long term gains

Invoice discounting means you don’t need to commit to long term interest rates for years to come. You are simply receiving an advance on money you are already owed. Your factoring lender can put together a program of invoice discounting that suits your business – long term gains include increased turnover, better growth prospects and improved cash flow.

So, is your business ready for invoice discounting?

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