Invoice finance is a fantastic facility to enable you to release cash tied up in unpaid invoices. As you know outstanding invoices can range from 30 day to 90-day payment terms and having to wait to receive your money can cause a lack of cash flow. That is why there is a facility available to raise the cash flow you need when you have completed the job or service. This means you will not need to be stress when your customers have delayed payments, as when the invoice has been issued you can receive the money usually within 24 hours.

You could also request a confidential invoice facility which means your customers do not have to know you have a facility in place. 

There are 3 different types of invoice finance facilities, and not everybody is aware with these.

• Invoice Factoring

• Invoice Discounting 

• Selective Invoice Finance

Invoice factoring is perfect for small businesses that need regular cash flow, you can raise funds against your outstanding invoices at the point in which you raise the invoice. The factoring company will manage all the collections and their reporting systems enable you to keep up to date on client’s payment history. They will have direct contact with your customers, which can really help your business as it saves you time chasing payments and allows you more time to focus on growing your company.  

The benefits of using invoice factoring means your money will be advanced to you without having to wait for your customer to pay. Typically, you will be advanced a percentage of the invoice up to 90% and then you receive the outstanding amount minus any fees once the invoice has been paid by your customer. 

Some key things to consider when choosing your invoice factoring provider is not only how much their rates are but the service in which they offer. The service that they offer is of course important as they will be having contact with your customers and therefore you are looking to have the best possible service. Here at Grow Funding we have knowledge of all the different providers and service levels they offer, please contact us and we can provide you with our independent insight on the lenders that might be right for you.

This facility is ideal for more established businesses with accounting systems in place and an existing credit control team. You fund the sales ledger as a whole and report the monthly movements back to the finance provider at the end of each month. You are responsible for your own credit control, and because of this, this facility is usually the most popular for larger businesses. Like invoice Factoring you will be advanced a percentage of the invoice up to 90% and then you receive the outstanding amount minus any fees once the invoice has been paid by your customer. The difference being that the advance is against the sale ledger as a whole, rather than individual invoices. The standard Invoice Discounting service is a disclosed facility to your clients; however you can request subject to credit a Confidential Invoice Discounting facility. This will mean your clients will be unaware you are using invoice finance. To understand more about how the different facilities, work and establish which works best for you, please contact us at Grow Funding. 

Unlike invoice factoring and invoice discounting, selective invoice finance is more straightforward and simpler to arrange. With this facility you can pick and choose the invoices you wish to raise funds against. There are often no contracts and the amount of money that you can withdraw straight away could be as much as 100%, this will be based on the credit worthiness of the company that you are doing business with. 

Once you have appointed a lender you have full control over which invoices you wish to fund. You can also decide how often you want to issue an invoice for your cash advance. The rates will be based on the invoice amount and the level of risk based on the company in which you are doing business with. Certain elements will be looked at such is their length of time in business and their average turnover.