Struggling with cash flow, then invoice financing could be the solution for you.

Invoice financing can offer that helping hand to businesses who have a history of customers being slow to pay. It’s an issue that all companies may find themselves in through various stages in their trading cycle, so a consistent measurable cash flow could be the peace of mind that you need to run a solvent, forward thinking business.

What is invoice financing?

Invoice financing is a way for businesses to borrow money against the amounts due from customers. Invoice financing helps businesses improve cash flow, pay employees and suppliers, and reinvest in operations and growth earlier than they could if they had to wait until their customers paid their balances in full. It can solve problems associated with customers taking a long time to pay as well as difficulties obtaining other types of business credit.

 

Invoice Financing

The benefits of invoice financing

Invoice financing, also known as accounts receivable financing or factoring, offers numerous benefits to businesses seeking to improve their cash flow and manage working capital effectively. One significant advantage is the accelerated access to funds. Instead of waiting for customers to pay their invoices, businesses can sell their outstanding invoices to a financing company and receive an immediate advance, typically a percentage of the invoice value. This enables companies to address immediate financial needs, such as paying suppliers, meeting payroll obligations, or investing in growth opportunities.

Furthermore, it provides businesses with greater flexibility and control over their cash flow. By converting their unpaid invoices into cash, companies can avoid the cash flow gaps that often arise due to lengthy payment terms or late-paying customers. This financial stability empowers businesses to make strategic decisions, seize business opportunities, and pursue growth initiatives without being constrained by cash flow limitations.

Another advantage of this option is that it is relatively easy to qualify for, especially when compared to traditional bank loans. Financing companies primarily assess the creditworthiness of the business’s customers rather than the business itself. This makes it an attractive option for small and medium-sized enterprises (SMEs) or businesses with limited credit history, as they can leverage their accounts receivable to access funding.

Additionally, this type of finance offers businesses a way to mitigate the risks associated with non-payment or late payment of invoices. When utilising invoice financing, the financing company assumes the responsibility for collecting payment from customers. This can provide businesses with peace of mind, knowing that they are protected from bad debts or delays in payments.

In conclusion, the benefits of invoice financing encompass improved cash flow, enhanced financial flexibility, simplified qualification process, and reduced payment risks. These advantages make invoice financing an attractive option for businesses seeking efficient working capital management and greater control over their finances.

Rural Finance was formed in 2004 and today, we are one of the largest Agricultural & Commercial Finance Brokering Networks throughout England, Scotland, Wales and Northern Ireland. However, whilst we are known as Rural Finance we have grown as a network and now offer finance solutions to every industry with a range of brokers who specialise in commercial, retail, construction finance, real-estate & professional loans.

To discuss your Invoice Financing requirements, you can go direct to our website and click “GET A QUOTE” and we will be in touch to chat through your options.