There are essentially two different types of invoice finance and it will depend on your own infra-structure on which may be the most appropriate.
Invoice discounting is a flexible form of finance which releases cash against your sales ledger which will reduce the cashflow timescales between your credit terms with your customer and cash being available to your business.
Unlike factoring, invoice discounting lets you retain control of your sales ledger management, solely providing the working capital that would otherwise be tied up as an asset on the balance sheet.
- Releases working capital against your invoices whilst you retain control of your sales ledger recovery process.
- In most situations 90% of your sales ledger value is available within 24 hours of the invoice being issued
- The costs are comparable with overdraft facilities yet provide more flexibility.
- Invoice discounting usually provided on a confidential basis so your customers are unaware of any funding agreement for your business.
Invoice factoring allows businesses to access working capital tied up in invoices by releasing up to 90% of the sales ledger value within 24 hours to boost your cash flow.
The funding provider will also provide a dedicated sales management service to ensure invoices are paid by your customers and allow you to focus on the key task of managing your business and new opportunities.
It is accepted by most businesses that most credit terms can have time delays for payment, the effect of this on your cashflow can be reduced with a factoring facility.
- The factoring company will advance up to 90% of the invoice amount.
- Factoring is a highly flexible form of business finance as the level of funding grows directly in line with your sales ledger.
- The working capital released by invoice factoring enables you to pay your costs on time and negotiate preferential terms if possible.
- Factoring is secured on your debtors and can make the speed of implementation very quick.
- Credit protection can be included to protect you from unexpected non payments
- Confidential factoring means the factoring company will perform credit control under your business to protect your brand.
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