How to Improve your Business’ Cashflow

Managing cash flow is essential to the success of any business however, sometimes your cash flow can be hit by a brick wall. If you issue invoices for your goods and services, you may find yourself waiting to be paid or managing late payments.

If this situation sounds very familiar to you, invoice finance may be your answer.

Invoice finance is when you receive finance against your outstanding customer invoices before they’ve been paid. Effectively, instead of waiting for 30, 60 or even 90 days to be paid, you will receive the funds that you’re owed via a finance provider.

There are two types of invoice finance products: factoring and invoice discounting. The biggest difference between the two is who collects the customer payments. Each allows you to release a large proportion of an invoice’s value within 24 hours of its issue.


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Factoring Invoice Finance:

Factoring is more popular with smaller businesses because a dedicated credit control team will collect your outstanding invoices on your behalf. Therefore, freeing up more time for business owners.

Invoice Discounting Finance:

This is the opposite of Factoring Invoice Finance as you will be responsible for collecting your own payments. However, the use of an invoice finance product will be kept completely confidential from your customers.

Many businesses that use invoice finance also add bad debt protection to make sure that they still receive payment, in the event of that their customers can’t settle their invoices. This is known as non-resource factoring.

How can Invoice Finance help your business?

Start up – As a start up, one of the main challenges that you face is securing financing for your venture. Invoice finance gives you quicker access to cash without worrying about building up debt.  Plus, it’s flexible so your credit can increase quickly to accommodate your growing sales – allowing you to build your business more easily.

Businesses looking to grow – Expansion plans are often stalled due to no funding being in place. Invoice Finance can turn your plans into reality as it will be freeing up cash so you can invest or expand your business.

Businesses entering new markets – Selling goods and services to overseas customers can present a number of financial challenges. Invoice finance can help you overcome unpredictable payment cycles, giving you access to money tied up in invoices without having to wait for invoices to be paid.

The Benefits of Invoice Finance:

  • Boost your cashflow without the need for debt – Invoice finance is not a loan so you’re not taking on any debt, keeping your cash flow healthy
  • Minimises late payment– Preventing you from making late payments to your suppliers
  • More opportunities – You will be able to take on new orders, expand and invest in your business
  • Take advantage of Bulk Buy Discounts – You will be able to take advantage of large quantity discounts or supplier discounts for early payments if available

So, if your cash flow could do a with a boost, Invoice Finance could be your answer! If you would like to find out more information, speak to our team on 01270 443510 or complete our contact us form. Our specialist team will answer any queries that you may have and will be more than happy to assist you with any Commercial Finance needs that you may have.