Invoice Finance

Quickly Improving Your Cashflow

Invoice finance, also known as accounts receivable financing, is a type of business financing that allows companies to borrow money against their outstanding invoices. It is a way for businesses to access funds that are tied up in unpaid invoices, providing them with immediate cash flow.

Invoice finance can help businesses improve their cash flow by providing them with immediate access to funds. It can be particularly useful for businesses that have long payment terms or experience late payments from customers. Additionally, invoice finance can be a flexible form of financing as the amount of funding available increases as the business generates more invoices.

How does it work?

Instead of waiting for customers to pay their invoices, businesses can sell those invoices to a finance company (known as a factor) at a discounted rate. The factor then advances a percentage of the invoice value to the business, typically around 80-90%. The remaining percentage, minus a fee, is paid to the business once the customer pays the invoice in full.

What types of businesses would use Invoice Finance?

Small and Medium Enterprises (SMEs): Small and medium-sized businesses often face cash flow constraints, and invoice finance can provide them with quick access to funds tied up in unpaid invoices.
Startups: Startups may use invoice finance to manage their working capital and maintain a healthy cash flow, especially when waiting for payment from clients.
Service-Based Businesses: Companies that provide services and have a significant time gap between invoicing and receiving payment can benefit from invoice finance. This includes consulting firms, marketing agencies, IT service providers, etc.
Manufacturers: Manufacturing businesses with long production cycles or payment terms often experience cash flow challenges. Invoice finance helps them bridge the gap between production costs and customer payments.
Wholesalers and Distributors: Businesses involved in the distribution of goods often have to wait for payment from retailers. Invoice finance can help them maintain inventory and cover operational expenses.
Construction Companies: Construction projects can have extended timelines, and contractors may face delays in receiving payments. Invoice finance can assist them in managing their cash flow more effectively.
Temporary Staffing Agencies: Staffing agencies that provide temporary personnel services may use invoice finance to cover payroll and other operating costs while waiting for payment from clients.
Transportation and Logistics: Companies in the transportation and logistics industry often face high upfront costs for fuel, maintenance, and other operational expenses. Invoice finance helps them meet these costs before receiving payment from clients.
Technology and Software Companies: Businesses in the technology sector, including software development and IT services, may have long payment cycles. Invoice finance can be a valuable tool for managing cash flow during these periods.
Healthcare Providers: Medical practices and healthcare service providers can use invoice finance to address cash flow challenges caused by delayed payments from insurance companies or government entities.