Invoice financing allows businesses to ease their cashflow by unlocking value in unpaid invoices. This service is increasing in popularity as cashflow concerns are effecting more and more businesses.
The late payment culture here in the UK effects almost every business on a daily basis, puts undue pressure on business just to stay afloat, there is help though, yes at a price, like all services and suppliers you need to choice carefully who you do business with, check out the terms of the contract carefully before you commit as many will expect you to commit for a minimum of twelve months.
How much will I be advanced?
Typically providers will pay 90% of the value of each invoice up front, with the remaining amount payable upon collection. However, the value of the advance payment will depend on the provider’s policies and the status of your invoices and customers.
What Does Invoice Finance Cost?
Generally invoice finance is made up of two seperate charges, firstly a regular service fee for maintaining your sales ledger. The second charge will be an interest charge against the value of each invoice.
Both these charges vary between suppliers so it’s important to see the full picture before making any decisions.
Are my Invoices Suitable?
Often you will find that invoice finance companies require a minimum turnover and may put in place certain restrictions around ratios of invoice to business or private customers. Other factors such as number of small numbers of customers and customers with no prior trading history will narrow your choice of provider.
Find an invoice finance supplier that is flexible and one that you can work well with and build relationships with like in any other area of your business and you initial investment could soon reap rewards.
