Your business is based on the work you do for your customers and clients and when those customers and clients pay you for the work done. In most situations, a client you work for will pay you within 30-60 days from when you invoiced. Invoice Finance is a way for your business to receive monies billed out sooner and will help you pay your suppliers more efficiently, helping you to build your companies business credit greatly.
The benefit of invoice finance is that your company will be able to receive monies sooner than 30 days from your customer or client. An invoice finance company will pay your invoice you send to your customer or client, up to 80% up front and will pay the remaining 20% when your customer or client pays the invoice finance company you are working with. Most invoice finance companies will have small fees that you will have to pay out of your remaining 20%.
Getting financed with an invoice finance company can be a fairly simple process. The finance company will go over your business credit history and your finances to make sure you are a stable company. After they do that, the finance company will contact your customers or clients you have sent invoices to. When contacting your customers or clients, they are altering your clients that instead of paying your business directly, they will make their payments to the invoice finance company. Once you have your finance company in place, they will help you receive any monies outstanding and will help you stay current with all your invoices you have sent out. Remember, you will send your business invoices for work done to your invoice finance company, they in turn will send out an invoice to your client.
Invoice finance is a great alternative to taking out a hard money loan or a conventional loan from a financial institution. A hard money loan or conventional loan will offer you the money you need for your cash flow immediately; the disadvantage to a loan are the finance charges, hidden fees and interest you will have to make with your payments each month. A hard money loan requires you to use your business, a piece of equipment or real estate you own as collateral. If you happen to default on your hard money loan, you would lose that collateral. A conventional loan will normally have a variable rate. A variable rate will make your monthly payment change each month. Not knowing what your monthly payment could be could hurt your cash flow each month.
Using invoice financing will help the cash flow within your business. Having your cash flow available will keep your business finances current will the suppliers you work with, your employees and your office finances. Staying current will also help your business credit raise higher and show that your business is a creditable company. When your business has all of these benefits a client is looking for, it will bring in more work for your business. The more work your business has, the more it will grow. The more your company grows, the more your business credit will go up, thus strengthening your business.
The other common type of invoice finance is know as credit card lending. If you do a fair amount of credit card sales each month you will be able to take out a loan based on these sales. This provides you with the chance to acquire immediate cash for your business and the money will be repaid from your credit card sales. The lender will deduct a small percentage from each sale until the loan has been repaid. This is a great way to stimulate your cash flow in a hurry if you need quick cash.
Corporate Credit Concepts specializes in invoice finance. For more information about invoice finance how it might benefit your business, please CLICK HERE for a free phone consultation.