Read on if you’ve been wondering “what is invoice financing?”. If you need to boost your cash flow and are waiting for invoices to be paid, invoice financing could be for you. There are two main forms of invoice financing available to you, which are invoice factoring and discounting. If you have tried and failed to get an overdue invoice paid, don’t mind your client knowing you have used an invoice finance company, don’t expect to trade with the company in question again or would rather use your time and resources for other activities, then you may well wish to opt for factoring.
Consider your options carefully
With invoice factoring, you sell your invoice to a finance company, who then chase up payment themselves. If you do have a good relationship with the client, predict they’ll be buying your products or services again, have the time to chase up payment and don’t want them to know you’ve been working with a third-party, invoice discounting may well be for you. It’s wise to spend time thinking about your circumstances and relationship with your client before you choose between factoring and discounting.
Keep most of the money
You’ll usually get to keep between 85-90% of the money owed to you, whichever you decide, though you may need to pay slightly more for factoring than discounting as you’ll essentially be using an outsourced collections department. Companies from many different industries are now turning to invoice financing when they need to access money locked up in unpaid invoices quickly. Invoice financing can give your cash flow the boost it requires, help you settle your own debts and even take advantage of excellent investment opportunities that just can’t be missed. You may wish to speak to three or four different companies so you can see what they have to offer before making your choice.