Growing your business is a constant balancing act which you need to get right. Investing in growth is essential, but often restricted by limited resources. One solution which can help ease any cash flow problems is invoice financing.
Invoice financing, or invoice discounting, is a method which can allow a business to access the cash value of its issued invoices without having to wait for the client or customer to actually pay their invoice. How does it work?
A business issues an invoice for goods or service provided. Typically, through an invoice discounting provider, the business can get a cash advance of around 80% of the value of the invoices in question. This can be done very quickly, usually within a 24-hour period. Rates can vary from one provider to another, but this method can give a small business with limited financial resources fast access to cash for operational expenses or growth strategies rather than having to wait to collect the amount owed for each invoice.
What are the advantages?
There are various advantages associated with using invoice discounting services such as those provided by ultimatefinance.co.uk, and these include the following:
Ready cash – this method of financing is much faster than applying for a bank loan or similar financial arrangement. A business can basically access cash the next day as part of the arrangement.
Free up cash – invoices may be payable in 30 days or 90 days in some cases. Invoice discounting allows a business to access the value of such invoices and receive hard cash which can be used for pressing business expenses or other projects.
Better cash flow – business cash flow can benefit from invoice discounting as once an invoice has been issued it can be quickly converted into cash which can be used to run the business and cover essential overheads. This effectively makes capital cycles, the difference between what comes in and what goes out, much shorter.
No collateral required – unlike many other financing solutions, invoice discounting does not require a business to use its assets or other collateral as security for the cash advance. The value of the invoices is sufficient. This makes it far easier in terms of setting up.
Greater growth opportunity – a business can opt to grow through credit sales without worrying about waiting to collect the value of these sales. This means that attractive credit terms can be offered to appeal to clients while the business can quickly collect hard cash based on the invoices issued.
Clever use of invoice discounting can allow even the smallest business to grow rapidly through easy and immediate access to a healthier cash flow based simply on the value of sales invoices issued. All efforts can be focused on growing sales through attractive credit options for new clients while being assured that cash flow will not suffer as a result.