> What is Invoice finance? Invoice financing is the process of an invoice lender providing a business with access to funding in return for one or more unpaid invoices. These can be used as collateral, and are often structured over a period of time instead of all at once. Invoice finance (also known as factoring) has been around since the 1800s, but it’s only recently that it’s become popular again due to increased competition in the marketplace – this means that you now have access to better deals than ever before!
WERGS is a company that can access a broad range of funding options, including equity, grants and loans. We work with businesses to reduce their costs and secure better deals – this in turn unlocks cash for the customers. Invoice finance is one way we can do this, by providing an instant cash injection into the business. On payment of the invoice from the customer, the lender will release the final amount minus any fees and charges. This can be a great way for businesses to get access to money quickly in order to grow or expand their operations. Some benefits of invoice finance include:
Release funds quickly
The benefits of invoice discounting are clear: you can realise the funds from your invoices much more quickly, which in turn frees up cash for other purposes. This can be a major boon for businesses that need to manage their finances tightly. Invoice discounting is just one way that businesses can get the cash they need to keep growing unhindered.
Remove the hassle of chasing payments if you wish…
Invoice finance providers will take responsibility for chasing your debtors and collecting payment. Invoices that are not paid within a certain time period can be sent straight to an external collections agency, meaning you don’t have to worry about this aspect of business ever again. This is an option, a lot of clients will choose to chase their own debtors as this builds a better relationship. It very much depends on how the deal is structured. The key here is that there are many choices available depending on business needs.
The funds can be used for any purpose
Invoice discounting is an arrangement in which the lender buys your invoices at a discounted amount, and then collects payment from your client. This means that you receive most of the invoice’s value immediately, rather than waiting to get paid by the customer or client. There are no restrictions on what the funds can be used for, either. The expectation would be the funds are being used for working capital.
Reduce the risk to your business
For SMEs, if one customer is late in paying a large value invoice, it can have a significant impact on the overall health and cashflow of the business. This is where invoice discounting can help – you get most of the invoice’s value immediately and reduce the risk to your business by keeping cashflow moving.
If your sales are not straightforward, e.g. you may have a debtor that takes up a significant % of your sales, or you may be exporting, we have funds that adopt a very commercial approach to provide you with the right solutions for your business.
Make your own payments faster
Because of the cash flow improvements invoice discounting offers, this should hopefully allow you to settle your own repayment obligations faster, whether these are debt repayments or your own invoices. This can be especially helpful when it comes to settling debt repayments or early invoice discounts.
Book a free consultation with our experts to discover how invoice finance could help grow your business in 2022: