Invoice finance looks set to become the most popular independent source of funding for small, growing businesses, after regulatory changes were approved by The Government in November 2018.
Using its debtor book to raise finance has long been a great option for a business that is expanding. However, some businesses haven’t been able to make use of this option due to the nature of their trading contracts. The regulatory changes have removed most of those limitations, making it easier for lenders to lend to those types of businesses.
How does invoice finance work?
Until an invoice is paid, cashflow is tied up in the debt. Invoice financing solutions release that cashflow by advancing funds, based on a percentage of the amount due on the invoice. The amounts borrowed are then repaid when the invoice is paid.
Invoice finance requires little or no security other than the debtor book. As a business grows, its debtor book grows with it and so does the amount a lender is able to lend to the business.
This makes invoice finance of particular interest to any business which has been relying heavily on bank finance; especially considering that traditional overdraft facilities are becoming harder to negotiate.
PMD is able to offer a full range of funding solutions under one roof, including all types of invoice finance. The independent funding options we offer, mean our clients never become over-borrowed or find themselves at the fullest extent of their banking facilities with nowhere to go.
For advice on financing a growing business using invoice funding options, contact Mark Millhouse, Head of Invoice Finance at PMD, on 07711 594030.