Invoice Finance boasts an array of benefits for businesses across many sectors. With benefits including upfront access to working capital, flexibility and the option of built-in credit control, Invoice Finance can appeal to a number of sectors such as haulage, printing, recruitment, manufacturing and wholesale.
What is Invoice Finance?
Invoice Finance involves a finance facility which allows businesses to leverage their unpaid invoices and give them instant access to the cash locked up in unpaid invoices from their customers and suppliers. Invoice Finance can grant businesses access to up to 95% of their outstanding invoices, allowing the smooth running of the business. The funding option has two main forms; Invoice Factoring and Invoice Discounting. Invoice Factoring allows businesses to draw down money against the value of their outstanding invoices immediately without having to wait 30, 60 or even 90 days to be paid. With this funding solution, the Invoice Finance supplier takes responsibility for the credit control process, chasing for payments on behalf of the business. Invoice Discounting allows all the benefits of an Invoice Factoring facility, however the business remains in control of customer payments and is more suited for businesses who may have an already established credit control team.
Businesses that love Invoice Finance
There are a number of business sectors that benefit from the quick access to working capital that Invoice Finance allows:
Haulage & Logistics
Haulage and logistics business can often face issues when it comes to being paid by their customers, with many waiting up to 90 days to be paid. This causes problems when they have obligations such as wages, fuel prices and vehicle repairs to be made. The period between issuing the invoice and being paid is often referred to as a ‘cashflow gap’ and can cause problems for businesses within the logistics sector when there is a list of payments that need to be made. Invoice Finance helps to plug this cashflow gap and grant businesses access to money locked up in these unpaid invoices, meaning they do not need to worry about late payments. For businesses that have large numbers of orders to be made and monthly payment obligations, Invoice Finance can take the pressure off and let them get on with other orders.
The printing industry can often suffer from erratic payment cycles and up to 90-day payments terms which can hinder taking on new orders and customers. With high reliance on technology and machinery, printing businesses can find themselves in a difficult position if they are in need of new equipment but are waiting for their customers to pay before they can do so. This can hinder the amount of orders taken on as well as disrupt their customer relationships. By having the upfront access to working capital, businesses within the printing industry do not need to worry about the agonising wait for their customers to pay before they can buy new machinery, pay their staff and meet supplier payment obligations.
One of the most important things to recruitment businesses is the maintaining of relationships with their clients. Recruitment is all about relationships and these can be hindered when these businesses are not able to pay their suppliers. Invoice Finance is particularly suitable for recruitment consultancies as there is often a significant delay between paying candidates or bills and receiving client payments. An immediate transfer of cash to the business means that focus can remain on expanding their teams and winning new business.
Rather than waiting 30, 60 or even 90 days for their customers to pay, manufacturing businesses can benefit from Invoice Finance as it allows them to release cash tied up in their outstanding invoices. The cash released from these invoices can create the much-needed working capital manufacturers need to order raw materials from suppliers, purchase new machinery, make essential payments such as employee wages, as well as continuing to grow the business. This can be an essential step for manufacturers who need a consistent cashflow cycle in order to develop their business.
The wholesale industry is another which is often burdened with late payments and long credit terms. This, paired with the demand for faster turnaround and delivery, means that wholesalers can find themselves in a tricky position if they are not being paid on time. The wholesale sector is also one that is highly affected by economic upturn and downturn - something that has been highlighted by the fluctuating demand brought on by the Covid-19 pandemic. Wholesalers often have to manage both economic changes as well as seasonal upturn and downturn and, if they are not being paid on time, it can make these changes difficult to navigate through. Invoice Finance grows in-line with a business’s sales ledger and so is preferable for those who go through periods of growth and decrease in demand.
These are just some of the many business sectors that benefit from the extensive list of Invoice Finance benefits. This funding solution can give the much-needed flexibility for businesses who want to move forward with their business without the underlying worry of late payments and gaps in their cashflow cycle.
Skipton Business Finance provides businesses with a wide range of Invoice Finance solutions, with the aim of supporting business growth and development.
You can find out more information about our Invoice Finance products below:
- Invoice Factoring
- Invoice Discounting
- My White Label
- Disclosed Invoice Factoring
- Recourse Invoice Factoring
- CHOCS Invoice Factoring
- Skipton Select - Interest-Free Invoice Factoring
- Confidential Invoice Discounting
- Disclosed Invoice Discounting
- Recourse Invoice Discounting
- Invoice Discounting for Small Businesses