Six Reasons Why Invoice Financing is an Excellent Solution to Cash Flow Problems

Banks are consistently coming under fire for their refusal to help businesses expand. A high number of companies are rejected for loans as their poor cash flow situation threatens to ruin the business. Single invoice financing is a way for these businesses to get the cash they need without the aid of banks. Large factoring companies and financial institutions make it as difficult as possible for businesses to benefit from loans. Single invoice financing on the other hand, is a quick and easy way for businesses with cash flow issues to get back on their feet. Below are six compelling reasons why you should consider single invoice financing for your company.

1 – Property Security Is Not Necessary

Banks are always looking for businesses to put up property as collateral on their loans. Single invoice financing providers only require the invoice as their security.

2 – Short-Term Commitment

With a loan, you are tied to the repayments until the entire sum is repaid plus interest. This can take several years in most cases. Single invoice financing providers generally ask for a 3 month notice if you wish to stop using their services which is perfectly acceptable.

3 – Available to Poorly Performing Businesses

Even if your business is making a loss at present, invoice financing providers will still help you out provided they are happy with your company overall after their background check.

4 – Remain in Control

You don’t have to give up all your invoices. Providers are happy for clients to pick and choose the invoices they wish to sell.

5 – No Minimum Customer Limit

You could potentially receive help from an invoice financing provider even if you only have a handful of clients.

6 – Affordability

There are a range of different fees charged by providers which depends on the services your company chooses. The best providers offer a low interest rate and have no hidden fees or extra charges for companies who sever ties.

As most businesses offer clients 30 days to repay, cash flow can become an issue as sales doesn’t necessarily equal success. Without ready cash, you can’t hope to expand. Single invoice financing solves this problem for you.

What Happens?

When you sell your product to a customer and the invoice has been given to them, you can sell this invoice to a provider. In return, you receive at least 80% of the invoice’s value straight away with the rest paid when the client settles the bill. So if you sell a £1,000 invoice, you could receive £800 ready cash as soon as the invoice is available. No more waiting 30+ days for the money. The final £200 in the above example will have provider’s fees taken from it before you receive it. There are providers who offer 90% of the invoice.

Fees

There are numerous factors that dictate the price of a provider’s service. You should never be paying more than 5% of the total invoice price and this must only be the case when you are receiving total service from a provider. There are packages available with a lower level of provider service but you would be paying less than 0.5% of your total invoice. Although these charges could be considered as an interest rate, the cost only extends to each individual invoice. For a relatively low price, you get a service that is unavailable anywhere else. Having cash in hand is the lifeblood of any business; could single invoice financing revive your company?

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.


Back to top