Whatever the size of your business, growth is essential. One of the worst things that can happen to any business is standing still. If you let things stagnate there’s no room for expansion and soon your competitors will start to catch you up and even push past you in the market.
But expansion isn’t always that easy. Business may be booming but a full order book doesn’t necessarily mean cash in the bank. When you issue invoices to your customers you have to operate according to yours and their business terms and in most instances, this can add at least a 30 day wait, but often much longer, as much as 90 days before receipt of payment.
If you need working capital, it’s worth looking into invoice finance and if you’re unsure of what this is, take a look at this guide explaining all you need to know, brought to you by Aldermore invoice finance.
What is invoice finance?
All the unpaid invoices on your sales ledger have a monetary value and they are debts agreed to be paid by your customers however, traditional high street banks do not put a value on debtors, in other words, the value of a business’s unpaid invoices are not taken into account but with an invoice finance facility, these are and have a value.
If you need instant access to cashflow, choosing invoice finance will ensure you receive an advance of an agreed percentage of the value of your outstanding sales ledger. This means instead of waiting for weeks or months to receive the funds, you’ll get access to your money much quicker, helping you to grow or expand your company.
Will it suit my business?
There are two specific forms of invoice finance offering different solutions to suit your specific business needs. They are:
* Invoice discounting
What is factoring?
Confidential factoring with Aldermore enables you to receive up to 90% off your outstanding invoices immediately. As a specific form of invoice finance, factoring places your sales ledger in the hands of the factoring agent.
This means that they’ll be no chasing payments involved on your side. This will all be placed in the hands of an experienced credit control team, handling all aspects of your debt collection. The real benefit of this in business terms, is that not only will you receive a high percentage of the funds upon issuing the invoice; you won’t need to spend any time chasing the payment, leaving you free to concentrate on the day to day running of your business. These two factors combined together are the perfect ingredients for business expansion.
What is invoice discounting?
Invoice discounting from Aldermore again gives you quick and easy access to your funds as soon as you issue the invoice. The main difference between this and factoring is that the responsibility of chasing payment rests with your business.
This is an ideal solution if you want to keep day to day contact with your clients, customers and suppliers consistent across the board. Dealing with them on all issues, including ensuring they pay their invoices on time, is perfect to continue to build those relationships with your clients.
Which is right for my business?
Which solution is right for you will always depend on the nature of your business and the relationships you have with your clients. You’ll know which one feels right but either way, invoice finance is a perfect solution, rather than an expensive overdraft facility and a business can thrive and expand, with regular access to cashflow.