Why Consider Invoice Finance (and How Does it Work)?

Building strong relationships with loyal customers is essential in the business world. However, waiting for invoice payments can create cash flow challenges and disruptions. To ensure financial stability and provide flexibility to clients, consider the advantages of affordable invoice financing. In this blog post, we’ll explore what invoice finance is, how it works, and how it can benefit your business.

Understanding Invoice Financing

Invoice financing is a solution that enables businesses to access funds they are owed by customers in advance. It’s a surprisingly affordable and flexible way to gain quick liquidity by leveraging outstanding invoices. Although its benefits are substantial, invoice financing remains an untapped resource for many businesses.

How Does Invoice Financing Work?

Let’s delve into the practical workings of invoice financing:

  • Normal Operations: As a business, you provide products or services to your customers and issue invoices as part of your regular operations.
  • Invoice Submission: Depending on your payment terms, customers have a specific period to settle their invoices. Once an invoice is raised, you share a copy with an invoice financing company.
  • Loan Arrangement: The financing company assesses the invoice’s value and agrees to provide a loan, typically up to 90% of the total outstanding amount.
  • Funding Transfer: Once the loan details are finalized, the agreed funds are swiftly transferred to your business account, often within 24 hours.
  • Invoice Settlement: When your client settles the invoice at a later date, the entire loan balance, including any agreed-upon borrowing costs, is repaid.
  • Ongoing Financing: Successful repayment allows you to continue submitting invoices to the financing company for additional cash advances as needed.

Benefits of Invoice Financing:

Invoice financing offers numerous advantages for businesses, including:

  • Quick Access to Funds: You can receive the funds within 24 hours, providing prompt financial support when you need it most.
  • No Long-Term Commitments: There is not any prolonged repayment commitments to worry about.
  • Maintaining Flexibility: By accessing upfront cash flow, you can continue offering flexibility to your important clients.
  • Affordable Access to Funds: Invoice financing allows you to access up to 90% of the outstanding invoice amount at affordable rates.
  • Low Interest Rates: Compared to traditional loans, invoice financing generally offers lower interest rates and borrowing costs.
  • Ease of Arrangement: Arranging invoice financing is relatively straightforward, offering a convenient funding option for your business.

Invoice financing is a flexible and accessible solution that helps bridge temporary cash flow gaps for businesses. By unlocking the funds tied up in outstanding invoices, you can cover expenses, invest in growth opportunities and maintain a healthy cash flow. With its swift funding process, cost-effective borrowing and straightforward arrangement, invoice financing presents an appealing alternative to conventional business loans or overdrafts. If you’re interested in learning more about the benefits of invoice financing or discussing your specific needs, reach out to our team today for a no-obligation consultation. We’re here to assist you in making informed financial decisions and supporting your business’s success.

By Craig Upton

Creating strategic partnerships and supporting data with extensive research in the latest trends Craig is well versed with most products within the financial sector. Craig has worked within the online marketing arena for many years, having worked with British brands such as FT.com, Global Banking Finance and UK Property Finance, specialising in bridging loans and specialist mortgage finance.

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