Invoice Finance is a great option for any business looking to improve cash flow. If you are selling to trade debtors on credit terms, and invoicing in arrears, then Invoice Finance could be a perfect solution for your business. Very simply, Invoice Finance frees up cash from your outstanding invoices within 24 hours. It bridges the gap between paying your suppliers and waiting for your customers to pay. So, it’s like getting paid Cash on Delivery. You can use the cash to run your business more efficiently.
Invoice finance is the umbrella term for Invoice Discounting and Invoice Factoring. It’s often called debtor finance or receivables finance. Invoice Discounting is the most widely used form of Invoice Finance in Ireland. However, Invoice Factoring is becoming more accepted as business owners recognise the benefits of having access to funding to support their growth plans.
Invoice Finance works very simply. You raise an invoice to your customer and send a copy invoice to the funder. Within 24 hours, the funder advances up to 85% of the invoice value to you. And you have the benefit of immediate cash. When your customer pays the invoice, you get the remaining value of the invoice (15%) less any agreed charges.What are the benefits?
An instant cash boost. Invoice Finance gives your business the benefit of immediate cash.
Flexible. Invoice Finance is far more flexible than a traditional overdraft as the funding limit grows in line with your sales ledger. This gives you the confidence to put your growth plans into action.
Better cashflow management. With a smoother cash flow, you can focus on running your business more efficiently.
It’s cost-effective. You can use the cash to to negotiate better prices, discounts, and reduce bank charges.
Improve credit limits. By paying your suppliers promptly, they may offer you better credit terms.
There are a lot of extra options with Invoice Finance, such as Bad Debt Protection (non-recourse) and credit control. This flexible product also forms an integral part of more complex solutions such as Stock Finance, international finance and Asset Based Lending. What’s more, Invoice Finance can be provided on a “Confidential” basis which gives you the working capital you need, without your customers knowing about your funding arrangements.
How much does Invoice Finance cost?
There are two main costs associated with Invoice Finance – an annual administration fee and a discount charge, which is similar to an interest rate levied on the funds in use. If Bad Debt Protection is included (non-recourse), there is an additional charge. The costs can vary widely, depending on the funder and facility you choose. We can explain all the fees and charges to you, to make sure you are fully aware of all the costs involved.
Which Invoice finance solution is right for me?
With such a wide range of funding options to choose from, you want to be sure you’re making the best choice for your business. With our 20 years experience, we have the expertise to help you make the right decision. Give us a call and we will explain all the options available to you and help tailor a funding solution to meet your individual needs.