Invoice finance is a term for the two types of invoice-based lending. This is a way for businesses to borrow against the amounts due from the customers. It is a useful financing tool for a business whose growth is hampered by slow payment of invoices as well as providing a helping hand for businesses to improve cash flow, pay employees, and suppliers. Businesses requiring this will give the lender the invoices for up to 95% of their value.
With invoice finance, the business will get the money that is owed to them much quicker (in some cases, within 24 hours) instead of waiting months.
There are two main forms of invoice finance
- Invoice Factoring
- Invoice Discounting
Invoice Factoring vs Invoice Discounting
The difference between the two is very simple; factoring allows you to get the money from the invoices without the wait as well as chasing the invoices for the business. Invoice discounting offers the same benefit, but the business is responsible for keeping the relationship with the customer and chasing the necessary invoices.
Deciding between the two funding options can be confusing and stressful; here at Think Business Loans, we are able to help you decide and guide you to the best decisions to make. Why not call one of our experts now at 0203 880 9880 to unlock your cash flow now.
Alternatively, fill out the loan journey to see what other loan types your business is eligible for.
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We were approached in 2017 with working on a turnover of £100k, and wanted to unlock some of the finances from invoices. We were able to provide invoice discounting finance, that allowed the client to factor some of their invoices. This was a small facility that allowed him to increase turnover.
Invoice finance is a term for the two types of invoice-based lending. This is a way for businesses to borrow against the amounts due from the customers. It is a useful financing tool for a business whose growth is hampered by slow payment of invoices.
What are the benefits of using invoice finance?
- Quick at releasing capital
- There is no need to inform your clients of using an invoice finance loan provider.
- They only pay interest on the money that they borrow.
Did you know invoice finance has two main factors; invoice discounting and invoice factoring. Click here to find out more!
After 6 months of using invoice discounting, the client’s turnover increased which was shown in new full accounts and management accounts. We were then able to get the client offered a full book invoice finance facility. The client is now sitting on a £3m plus turnover company that is growing steadily.