Using invoice financing services can provide businesses with an effective way of bridging the gap between invoicing and payment. The result being improved cash flow and a more balanced and successful company.
Small to medium sized companies often suffer a frustrating and inconvenient hiatus between the time when invoices are sent out and the time when they are paid. Some invoices take up to 120 days to be settled and in that time opportunities to profit from new business can often be missed out on due to cash flow problems.
Among the options for eliminating this problem is invoice financing and so what is the best way of introducing this as an asset to your business?
How Invoice Financing Works
Finding the most suitable invoice financing service can be a time consuming and problematic procedure and so it makes sense to use a broker such as Touch Financial, who can sieve through potential providers and find you the best deal.
Once a provider has been secured, copies of invoices are sent to the provider and the money for each invoice is advanced to the company by the invoice finance service provider within around 24 hours.
This gives the company fluidity and the capability to use the money straight away if it is required.
It is the service provider who receives the actual invoice payment from customers and any surplus capital (unborrowed money) is forwarded to the company after fees have been deducted.
An Enhanced Service
This is the model for the basic service, however, it can be customised by introducing a number of add on services, including collection and payroll facilities. These can further alleviate difficult or time consuming tasks from the day to day running of a business, leaving them free to focus on what they do best.
There are many benefits from using an invoice finance service and many of the benefits come with immediate effect.
Invoice finance services are more flexible and easier to set up than traditional forms of credit agreements, but are comparable in terms of fees and rates. This flexibility brings with it a knock-on effect, allowing businesses the ability to use capital that would, in other circumstances, be unavailable to scale or to minimise covenants.
Using invoice finance services offer a proactive and measured approach to further developing a business through revitalised cash flow models and it is in this respect that they should not be overlooked.