If you’ve been wondering “what is invoice financing?”, help is at hand. Invoice financing allows you to generate money to boost your cash flow using unpaid invoices. There are two main forms of invoice financing available to you. These are invoice discounting and invoice factoring. With invoice discounting, you borrow money against your invoice and settle the bill once you have been paid. You retain the responsibility of dealing with your client. This may be your best option if you have a positive relationship with your client, the invoice isn’t late but you need money now, you don’t want them to know you’ve used a third-party or you expect to sell your services and products to the company in future.
Could factoring be right for you?
If you don’t expect to trade with the client in the future, you have tried and failed to get the invoice paid and it’s now overdue, you don’t mind them knowing you’ve got a third-party involved or you don’t have the time or resources to pursue payment, you may well wish to opt for invoice factoring. With factoring, you sell your invoice to a financier who then chases up the payment themselves.
Boost your cash flow quickly
Invoice financing could be the ideal option if you need to settle your own debts, have been presented with an unmissable investment opportunity that won’t wait around for long or simply need to improve your cash flow quickly. You can usually expect to get the money you need within 24-48 hours. It may be wise to speak to around three or four different invoice finance firms to see what they have to offer so you can come to an informed decision on which company to work with. More and more companies are unlocking the value in their unpaid invoices via discounting and factoring.