Invoice Finance

Invoice finance is a collective term used to describe various types of invoice-based lending. Invoice finance companies enable businesses to raise capital against their unpaid invoices and potentially release up to 90% of the invoice value to boost their cash flow position.

There are different types of invoice financing options available to businesses depending on the situation and the amount of control they require in collecting their unpaid invoices. Once payment has been made by the customer the lender will release the final amount minus any fees and charges.

Invoice Factoring

Invoice factoring is when a business sells its invoice to a third-party company – the lender. Invoice factoring companies allow you to release cash from your unpaid invoices quicker than having to wait up to 120 days for your customers to pay you.

Invoice factoring is a form of invoice finance and can give your business an effective solution to improve cashflow.

Invoice Discounting

Invoice discounting is an invoice finance facility when a company’s unpaid invoices are used as collateral for a loan. Invoice discounting companies enable businesses to leverage the value of their sales ledger.

With an invoice discounting company, when sending out invoices to customers a proportion of the total amount becomes available from the lender, which provides your business with a source of working capital while you wait for the payment of your invoice to be processed.

The benefit of invoice discounting is you maintain responsibility for your sales ledger as well as your payment chasing and invoice processing. The main difference between this method and invoice factoring is that your customer is not aware that you have taken on cashflow finance. If you prefer to keep the financial arrangement confidential from your customers, then invoice discounting may be the right product for you.

You no longer must wait up to 120 days to receive payment for your goods and services, and you remain in charge of your own credit control processes, meaning that you continue to chase late payments and therefore your customers are not made aware of the lenders’ involvement.

Speak to one of our experienced commercial managers about invoice finance for your business.

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