Starting up a business means thinking about a lot of things at once. From hiring staff to legal considerations, you’ll have a lot on your plate. However, there are few things that can be more detrimental to a new business than cash flow, late payment issues and lack of funding. So, how can invoice finance, which has been proved to solve these problems, help business start ups?
What is invoice finance?
Invoice finance gives your business pre-payment for unpaid invoices. If you’ve got a customer who hasn’t paid their debt, then you can release your invoice to a factoring lending who can then provide funding equal to around 90% of the invoice value. Factoring and invoice discounting are two popular varieties of finance. Factoring will be more suitable for start ups, whereas invoice discounting is often used by more established businesses.
Will my start up be eligible?
If you’ve got client orders on your books and you issue credit terms of 30, 60 or 90 days to other businesses, then you can use invoice finance. Whereas banks might well be put off lending to new businesses without a track record of trading, factoring lenders won’t see this as such a big obstacle. So long as you’ve got an active business, you can apply for factoring and invoice discounting services.
How can invoice finance help?
Start ups are often stretched thin resources wise, and won’t necessarily have the staff numbers to help chase up customer debts and collect payments. Factoring is a form of invoice finance where you hand over payment collection to the lender, who will get customer payment on your behalf. This is all done in a professional manner, as it is in both your interests that your customers remain happy.
Just because your start up business is struggling to get access to bank funding doesn’t mean that help is out of your reach. Even the government is seeing the potential of invoice finance to enrich the SME sector, and has championed it as a method to help the UK economy grow and recover.
Select Factoring has a range of invoice finance solutions, suitable for business of many shapes and sizes.