Maintaining a positive cashflow is crucial for any business for its ongoing success. Often one of the key barriers to this is delays by customers in paying their invoices. Being able to protect a business against bad debt is hugely important and by utilising invoice finance a business can access up to 90% of the value of any unpaid invoices.
The amount of money accessible to a business will vary depending on how the funder assesses their specific need and financial performance. There are 2 types of options available:
- Invoice factoring – a lender arranges a financial agreement and will pay a percentage of any invoice to the business as soon as it has been issued. The lender will also manage the businesses sales book and collect payment directly from the end customers. Once the invoice has been paid, the lender will deduct its fee and then transfer any outstanding balances directly to the business.
- Invoice discounting – operates in the same way as factoring apart from the fact that the lender has no direct involvement with collecting the money from the end customer. The business retains full control of customer interactions.
Some of the key advantages of invoice finance include:
- A business maintains a steady cashflow even if invoices remain unpaid for a significant period of time.
- The lending facility is flexible and a business can use the funds for whatever purpose they require.
- A business remains in full control, they keep all their equity with immediate access to cash.
There are many industries that can benefit from the use of invoice finance, including construction, rail, professional services, logistics, printing & publishing, manufacturing, recruitment, pharmaceutical, security, transport and healthcare.
If you have any questions or would like to discuss any aspect of invoice finance, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.