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Factoring and Invoice Finance

While many entrepreneurs and business owners still see the traditional means of financing, such as bank loans, overdrafts and commercial mortgages, many more are looking for alternative finance options outside of this. Factoring and invoice finance are particularly useful, so we’re going to take a closer look at how this can help SMEs with their cash flow.

Factoring is a simple process. You pass on your invoices to a factoring lender, who will be able to release 90% of the funds to you within 24 hours. This means you can get quick and secure access to funds, without having to wait sometimes months for payment to materialise. The strain of chasing customers for payment will also be taken up by the factoring lender. Once the debts have been cleared with customers, the lender can then release the rest of the payment, minus a small borrowing fee.

This form of lending lets you get instant access to funds tied up in unpaid invoices. It’s especially useful if your business is caught up in a supply chain, giving services or goods to large companies. They will often put off payment for budgetary reasons, which can limit small business cash flow. Borrowing against invoice like this is low risk for lenders, as gold standard large companies can be relied upon to clear their debts.

Invoice discounting is another option, which gives you greater control over invoices. In this variation, your busiess is the one responsible for chasing client debts and you can choose which invoices to submit to the invoice lender. Similar to factoring, it has minimum paperwork and hassle, and can immediately release funds for your business.

If you need a cash flow boost, then invoice finance and factoring can solve many problems facing SMEs in the current economic climate.

Select Factoring offer a range of solutions that could solve some of your business’ funding problems.

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