Invoice finance is shaking off its “alternative funding” tag, rapidly gaining popularity with companies of all size in every industry.
No longer a last resort for struggling businesses, more firms than ever are using trade finance to secure working capital and support growth. A simple form of low-risk borrowing, the potential benefits cannot be overstated in what is an increasingly unstable economic climate. With this in mind we felt it was the right time to offer our list of reasons how your business could benefit from invoice finance in 2017:
Fast and Effective
No credit checks and minimal paperwork means you can get instant access to funds. From the moment your application is recieved, many trade financiers will pay your invoices in under 24 hours.
Borrowing money you are already owed means there is none of the anxiety and debt liability that comes with other types of funding such as loans and overdrafts. As soon as the goods or services provided have been accepted and the invoice sent, it’s your money. The only difference with invoice financing is that you are getting it sooner than you otherwise would, helping your cash flow keep moving.
Reliable payments make cash flow projections simple, because you can accurately measure outgoings and income for an extended period. This removes the uncertainty of trying to pay regular expenses like rent and staff wages without consistent working capital.
Stable working capital will also provide a platform to pursue business opportunities and take on further expenses. This could mean new trade partners or additional staff and equipment.
Invoice financing involves minimal expenses, with most providers charging a fixed fee at a fraction of the total invoice amount. Look for providers who guarantee that no hidden costs are involved and who don’t charge increasing interest rates that can quickly spiral out of control.
Invoice finance is on the up, which means there are plenty of choices to consider when selecting a provider. Some will be better suited to large businesses, with others offering a more personal, flexible service that might fit smaller companies dealing with smaller amounts.
A Personal, Bespoke Service
Unlike lenders offering lump-sum loans, invoice financing is designed specifically for your business, with funding that increases or reduces in line with turnover. This could mean borrowing more to cope with peak season, or less during quiet periods so that you can meet the demands of the industry you are in. Either way, it’s a flexible solution to your cash flow concerns that’s designed to work on your terms.
Leaving sales ledger in the hands of an independent organization is one of the biggest fears associated with trade finance but this needn’t be the case. Be clear with your financier about the kind of relationships you have with your clients and keep in regular communication with them to ensure no ill feelings develop. Invoice finance facilities are experienced in dealing with clients on behalf of a business and could actually strengthen and clarify relations between you and your customers.
Many providers do offer a confidential service for those worried that having a third party help with cash flow will reflect badly on their company. This is a simple arrangement to manage, with an external account set up which payments from customers can pass through on their way to the trade finance facility. Far from casting a negative reflection on the company however, using invoice financing is often seen as a sign of growth and ambition, and is a practice that is becoming increasingly normal.
(Watch our short video – Will My Customer Mind?)
With your invoice finance provider in charge of chasing up client payments, you can spend more time improving and expanding your company. Devote yourself to improving customer service or tracking down new business opportunities.
One of the most stressful things about running your own business is worrying about your cash flow. Remove these concers with an invoice finance service and feel those stress levels drop!
Funding that matches your income encourages gradual growth without fixed lines of credit or the risk of deficits and mounting debt. As your list of clients and volume of exports grows your borrowing grows with it, ensuring you are never left out of pocket.
Interested in Taking Advantage of Invoice Finance for Your Business?
Please do get in touch with Jardine Norton at any time. One of our staff will be happy to talk you through the benefits trade finance could hold for your business and the different options available to you.