Invoice Finance

What is Invoice Finance

Two primary solutions within invoice finance are:

Factoring: factoring involves selling your outstanding invoices to a financial institution (a factor) at a discounted rate. The factor then takes over the responsibility of collecting the payments from your customers. This provides you with immediate cash for your invoices, helping improve your cash flow.
Invoice discounting: with invoice discounting, you borrow money against the value of your unpaid invoices but retain control over collecting payments from your customers. It's a more confidential arrangement compared to factoring, as your customers might not necessarily know that you're using invoice discounting.

How does Invoice Finance work

Invoice financing converts a percentage of your outstanding invoices into cash as soon as your goods or services are delivered to the customer.

Interest is charged on the amount advanced whilst the original invoice remains unpaid and additional costs such as administration and monitoring fees may apply.

Both factoring and invoice discounting are aimed at helping businesses access funds tied up in their accounts receivable, enabling them to manage their working capital effectively and alleviate cash flow constraints.

Invoice finance is particularly beneficial for growing businesses that pay suppliers on short terms or are required to hold inventory to fulfil customer orders.

The benefits of Invoice Finance