INVOICE FINANCING

WHAT IS INVOICE FINANCING?

Invoice financing refers to a variety of financing options in which companies sell their accounts receivable (invoices) to a third party for a portion of its value. It’s a beneficial financing instrument for companies whose growth is impeded by late invoice payments.

HOW DOES IT WORK?

You go about your business, as usual, billing your clients and customers.
The invoice details are subsequently forwarded to the agreed-upon invoice finance provider.
The provider pays you a pre-determined proportion (which varies by firm) within 48 hours.
If necessary, you will chase the payment as usual, or the supplier will do it for you, depending on the agreement.
Once the invoice is settled, you will get the balance of the invoice minus any agreed-upon service fees.

SINGLE AND SELECTIVE INVOICE FINANCING

It is possible to organize finance for a single invoice in the same way that some suppliers utilize it for their entire sales ledger—this facility, also known as spot factoring. Single or selective invoice discounting is excellent for companies that rely on a small number of high-value invoices. Late payments, in this case, can put an otherwise prosperous business at risk.

Selective invoice discounting is a method of raising working capital by selling individual invoices to a finance provider at a discount. As a result, you’ll have a straightforward, adaptable approach for dealing with cash flow issues.

WHAT ARE THE BENEFITS OF SINGLE INVOICE DISCOUNTING?

Selective invoice discounting allows you to liberate funds trapped in unpaid bills for a one-time fee, rather than waiting 30, 60, or even 90 days for the consumer to pay.

Other benefits include:

  1. You preserve control over your sales ledger and client connections – your customers do not need to be aware of the presence of a financial provider.
  2. Money can be raised in a matter of minutes.
  3. A company might benefit from financial flexibility, allowing it to expand and invest in new projects.
  4. There are no long-term contracts or fees to pay on a regular basis.
  5. If you wish to leave a selective invoice discounting agreement, there are no ‘break fees.’
  6. It can be used as infrequently or as frequently as you require.
  7. Your accounts receivable are completely under your control.