How to free up capital and improve cashflow using invoice financing

How to free up capital and improve cashflow using invoice financing

Business Finance, News

Invoice financing is a great way for you to build up a solid amount of capital which you can then put back into your business. It is obvious why this would be attractive – it means you have increased your amount of capital and can allocate more of your budget towards creating new products or marketing your service. But, where should you start with invoice financing and how does it work?

How does invoice financing work?

Put simply, you can send your sales invoices to an invoice finance provider who will pay you somewhere up to nine-tenths of the invoice without you having to wait. This means that you immediately receive the bulk of your payment. You will receive the rest when the client pays.

This is a great option not only because it means you get the money to reinvest immediately, but you no longer have to worry or put funds into chasing clients. The invoice finance provider will follow up with the client and ensure that the payment is sent to you.

There are three kinds of invoice financing you might want to consider.

Factoring

This works as described above. You send your invoice to the invoice finance provider and receive a percentage of your invoice ready to be used immediately. They will then continue to follow up payments and you will later receive the rest of your payment without having to waste any of the time you need to focus on your business.

Invoice Discounting

This differs in that you carry on taking control of collecting the payments and keep the credit control function within your business.

Spot Factoring

This option is better for allowing you more freedom as there is no minimum length of the contract. You can use it as little as once if you want. It is up to you to choose which invoices you want to send and receive immediate capital from which gives you more control over your cashflow.

Invoice financing – find out more

Request your copy of our invoice financing guide. Or get in touch to find out how we can help you maintain a healthy and stable cash flow for your business.

For maximum control over your own finances, this is the best option, however, there are perks to each kind so make sure to get in contact with us if you want to know more.

Image by: Picdream via Pixabay

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