Invoice Finance ties up all customer invoices.To help explain how invoice financing can support SMEs, we explore the six most common myths: Newer options have helped to modernise the market – and it is now possible to finance invoices individually (known as selective Invoice Finance or spot factoring) to maintain more control over the accounts process. It can be a useful tool for SMEs who rely on a regular inflow of cash to operate, helping ensure that capital is available to pay wages and bills on time, and control over the business is maintained.įactoring and discounting solutions required businesses to hand over their entire debtor book for a fixed contract term, and in the case of factoring the consequence can be a loss of control over invoices and a potential breakdown in client relationships.Ĭharging structures were often complex and difficult to forecast with the result that many have been scared away from this form of finance. Put simply, Invoice Finance is a form of releasing cash tied up in outstanding invoices – thereby allowing the supplier access to money before the customer has paid. In the current economic climate, some companies take full advantage of the repayment terms offered and it can take months for them to settle what they owe, which in turn leaves cash flow strained and suppliers left unpaid. Invoice financing has become an increasingly popular form of providing short-term cash flow for the business-to-business sector.
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