Why should your business consider using invoice finance? There are many reasons to consider this type of alternative finance, but not all businesses will be aware of the different benefits. There has been research to show that not enough businesses are up to date with the advantages of invoice finance, so we’re here to put things straight.
1) Invoice finance is flexible
There are no rigid restrictions with how much you can borrow with invoice finance. The amount you can borrow depends on the size of your invoices, so the more you sell the more you can borrow. Unlike traditional funding such as loans and overdrafts, invoice finance can grow with your business and its increasing turnover.
2) Funding is based on current performance
Unlike business loans, invoice finance is based upon current financial performance. This means its a great way for start up businesses, without long financial records, to get access to funding. Banks are often unwilling to lend to ‘risky’ start ups, so this could be a lifeline for businesses unable to access financing through more traditional paths.
3) Invoice finance does not interfere with your day to day running
Invoice finance is easy to work around – you simply produce your goods or services, invoice the customer and then pass those details on to your invoice finance provider. Depending on whether you opt for invoice discounting or factoring, you’ll either then chase up payment with clients or else the lender will do that on your behalf.
4) Invoice discounting is discrete
If your business is medium sized and you want tor remain discrete about your use of invoice finance, then you may be eligible for invoice discounting which allows you to retain control of your credit collection. This means customers won’t be any the wiser that you’re using a lender, and you can remain in control of your customer relationships.
5) Factoring offers a complete credit control system
If your business is smaller and you don’t have a secure finance infrastructure you can pass the responsibility of invoice collection to your factoring lender. They will chase payments for you so you can get on with growing your business.