For small to medium businesses, it can be a huge financial burden to have money tied up in unpaid invoices. Maintaining a healthy cash flow is imperative to your success and growth and in today’s current economic climate, some companies will take advantage of the full repayment terms offered, which means that it could take months for them to settle what they owe, leaving your cash flow strained and suppliers left unpaid.
Invoice finance is increasing in popularity for this very reason. It is quick and efficient to gain access to the money you are owed, leaving you free to pay suppliers, and employees as well as investing in operations and overall growth.
Let’s look at what invoice finance is and the top 5 benefits that could help you in your business.
What is Invoice Finance?
Invoice finance is when a lender uses an unpaid invoice as security for funding. It helps you to manage your cash flow by bridging the gap between the point at which you make a sale and the time it takes for payment to be received from the debtor. You can avoid the usual wait for invoices to be paid and it ensures that you gain most of the cash you are owed, immediately.
This method of funding allows you to gain access to your cash, enabling you to invest in operations, focus on the growth of your business and significantly better your cash flow as the cash can be put straight back into the business, increasing turnover and profits more quickly.
Invoice finance is relatively quick and simple to apply for and once your application is agreed upon, you can expect to benefit from the cash within 24 hours. It is also a funding option that offers less risk to your assets and reduces your risk of late payments and bad debts.
Our top 5 benefits of Invoice finance
While there are many benefits of invoice financing for businesses, we thought we would choose our top 5 in the hopes that they can help you with your cash flow needs.
- Improves your cash flow
Possibly the most immediate advantage of invoice financing, is that it can boost your cash flow, freeing up funds which can be of better use being invested into new growth opportunities, project and service improvements, bigger and better equipment, and advertising to name a few. Having immediate access to cash puts you in an advantageous position when it comes to competition. - Growth in conjunction with salesUsing invoice finance allows you quicker access to cash which in turn enables you to grow your business. In conjunction with this, the credit line of invoice finance grows along with your business, so as you grow and see larger amounts of money pass
through your business, you see an increase in the amount of capital you’ll have access to. - Quicker access to cash and fewer limitations
- One of the biggest benefits of invoice finance is that it frees up your cash flow quickly. In just 24-48 hours after the application agreement, you can expect to see the cash owed to you, in your account, which means that you have more time and capital to focus on the growth of your business. What’s more, is that there are no limitations with invoice finance, unlike many other forms of business finance.
- Less risk to personal or business assets
Unlike other forms of funding, mainly from banks, where lending comes with collateral in the form of assets such as your home or business unit, invoice finance usually requires no such risk. The invoice itself acts as the security which makes it ideal for businesses that have fewer assets or want to understandably protect their assets - Extra options within invoice finance to suit specific business needs
There are a few types of invoice finance that could prove beneficial to your business, one of these is Invoice Factoring, which means that your finance provider will follow up on the invoices on your behalf, saving you valuable time that could be put to better use within your business. Other facilities may be completely confidential, and the funder will solely lend the cash for a fee.
PMD: Specialist Invoice Finance Brokers
At PMD, we have extensive experience in securing invoice finance for our clients and we work with businesses across varying sectors to help facilitate their growth. With access to over 50 invoice finance companies, we take the hard work out of applying for invoice finance, leaving you free to concentrate on the pressing business issues at hand.
We believe that no business should be held back by its finances and our dedicated team will take the time to truly understand your business and find the right funder to support your growth plans. If you already have an existing invoice finance facility, PMD can benchmark this against what is currently available on the market and improve it by either reducing costs or increasing funding, and in many cases both.
Get in touch with us today to find out if specialist finance brokers can help you secure the finance you need, to accelerate your business growth.