How does invoice finance service work?

Invoice finance service is a comprehensive term to explain a range of asset-based finance facilities. It’s a practical financing tool for businesses whose expansion is hampered by slow payment of invoices.

How Does Invoice Finance Work?

• You continue your business as customary and invoice your clients/customers

• You then pass the invoice details to the agreed supplier of invoice finance

• The provider pays you an agreed percentage (this varies per company), often within only forty-eight hours

• Depending on the agreement, you will chase the payment as usual if that is required, or the provider will do that for you

• You obtain the remainder of the invoice amount once the invoice is paid, minus any settled service fees.

Invoice Finance Service

Single and Selective Invoice Finance

Just as some providers use finance for their whole sales ledger, it is also probable to arrange it for a single invoice.

Sometimes called spot factoring, single or else selective invoice discounting this provision is perfect for businesses that rely on fewer invoices of a larger value. In these situations, late payment can put an otherwise gainful business into a decisive situation.

Benefits

• Invoice financing companies is more supple than business loans or overdrafts

• Decisions to loan against invoices can often be made faster

• The funding grows in-line with the company’s income

• Usually, you get a greater level of borrowing against the assets

• Can help to diminish the risks of late payments or defaulted invoices