Liquid cash is what keeps you trading, growing and hitting your goals as a business. But sometimes, that access to ready cash can slip. And when cash is in short supply, you need a fast and convenient way to bring increased cashflow into the company.

One common way to do this is to look at invoice finance – a way to use the equity tied up in your unpaid invoices to raise cash quickly and with minimum hassle.

How does invoice finance work?

Invoice finance is a financial tool that allows you to convert your unpaid customer invoices into cash, providing immediate liquidity. When bills need paying, staff wages are due and there’s very little cash in the bank, invoice finance is a great solution to your problem.

There are two main types of invoice finance – invoice discounting and invoice factoring – both of which work in slightly different ways:

Invoice discounting.

With an invoice discounting approach, you (as the business) retain ownership of your invoices and receive a portion of the invoice value upfront from your invoice finance provider. Your business is then responsible for collecting the full amount from the customer by the usual payment deadline.

Invoice factoring.

By contrast, with invoice factoring, the factoring company purchases the invoices outright, and also assumes the credit risk. The business receives a percentage of the invoice value upfront, typically at a higher amount than if you were to use invoice discounting.What are the major benefits of invoice finance?

Improved cashflow.

You have almost immediate access to additional cash, helping you cover your operational expenses and seize new opportunities.

Reduced credit risk.

Factoring companies often assume the credit risk, which serves to protect your business from any potential bad debts.

Improved credit score.

When you make timely payments to the factoring company, this can help to boost your company’s creditworthiness and credit score.

Flexible financing.

Invoice finance can be tailored to meet your specific financial, operational and strategic needs, with options like recourse and non-recourse factoring.

Access to working capital.

Invoice finance gives you a steady, stable stream of working capital, giving you the capital needed to grow and scale the business.

Talk to us about making use of invoice finance.

If you’re struggling to source the cash you need for the coming period, don’t worry. Come and talk to us and we’ll help you find the most suitable invoice finance provider.

We’ll also work with you to come up with a financial strategy and cashflow process that keeps your liquidity and cashflow aligned with your ongoing business plan.