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SME consider invoice discounting

ore and more  new small businesses are looking for different ways  of financing their progress as bank lending dries up and the economy continues to suffer. Peer lending and pawning valuables have proven to be attractive options for some small businesses, and now invoice discounting is gaining in popularity. Invoice discounting is a process wherein a finance company purchases an invoice – a bill for a service or product – at less than its face value so that the business can get cash in hand without waiting for the billed customer to pay the invoice. David Banfield, president of Interface Financial Group, says that interest in invoice discounting has surged since the economic downturn.

It’s common knowledge that the down economy has strapped a number of small  businesses seeking financing. With banks reluctant to lend, particularly to  newer companies or to those needing the smallest of loans, these businesses are  seeking funding alternatives.

SME  businesses have limited options for quick cash, though. Two  options growing in popularity include peer  lending and pawning  small valuables. Another option is a form of factoring called invoice  discounting.

Interface Financial  Group provides funding to small businesses through invoice discounting. The  39-year-old franchised company, which operates in seven countries, says it has  seen demand for its services grow exponentially recently as a result of the  economy.

David Banfield, president of Interface Financial, explains how the process  works

What is invoice discounting?

 

basically where by you normally would as part of your business, send invoices out to your clients who owe money, you would do this as normal but you can inform a lender that you will be doing so and they will lend you up to 85% 90% of your invoice total, then when you have chased your clients for payment, you will recieve the rest of the funds minus a small fee.

Invoice discounting is simple quick and efficient, and you will only take as much money as you are owed by your clients.

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