If your business is facing a squeeze when it comes to cash flow then it could be worth considering invoice finance as a potential solution. Any business that issues invoices on a 30, 60 or 90 days basis could be eligible, so it’s worth being up to date with all your alternative lending options. So, how can you improve your company’s cash flow by using a factoring service?
Late payment is a big issue for many SMEs, with many man hours each year being lost to chasing payments as well as the inevitable negative effects on cash flow restricting any growth plans. This can be hugely detrimental for any business, and many small companies are being continually strangled by poor cash flow caused by late payment – this is something that invoice finance can help to solve.
If you’ve got one or a number of invoices that customers are being slow to pay then you can borrow money against the value of the invoice through a factoring lender. They can release up to 90% of the value of the invoice within 24hours so you can get access to the funds you need right away.
If you’re a small business then factoring could be the most suitable option – in this case, the lender will take over chasing payments for you, helping to free up further resources for your business. Invoice discounting is often used by companies who wish tor retain collection duties – they often have their own dedicated finance department – and so this option is suitable for slightly larger businesses.
In both cases, the remainder of the invoice value is released to you once the customer has cleared their debt, minus a small lending fee. All forms of invoice finance help to give your business more flexibility and breathing space, especially if you’re continually kept waiting for large payments from big customers.
If your business wants to improve cash flow then invoice finance might be able to help.