What is invoice financing? There are two main forms of invoice financing. These are invoice discounting and invoice factoring. With invoice discounting, you borrow money against your invoice until your client pays you. You’re then in a position to settle your debt with your financier. Discounting may be for you if you do need to unlock the value in your invoices early but don’t want your client to know you have been working with an invoice finance company.
Help if waiting for payment isn’t an option
If you don’t mind your client finding out you’ve used an invoice finance company, you’ve found it hard to get paid or don’t want to spend time chasing up invoices when you could be focussing on other tasks, invoice factoring could be the right option for you. A growing number of companies from various different sectors are using invoice finance companies to unlock the value in unpaid invoices. There are many reputable companies on the market offering these services. You may wish to speak to three or four different companies to see what they have to offer before you come to a decision on who to work with.
Find the right company for your needs
You’ll usually get to keep around 85-90% of your invoice. It’s best to expect to pay slightly more for factoring as you’ll essentially be using an outsourced collections department. Relations can become frosty when companies get third-parties to chase up money for them, so it could be best to opt for a discounting service unless you’re sure factoring will be the right move. You may wish to shop around to find the right invoice finance team for you, especially if you think you may need to use these services repeatedly. Invoice finance can help you get the cash flow boost you need when you need it.