What is invoice finance?
Invoice finance is a tool used by businesses in order to stop slowed growth due to prolonged invoice dates. It is considered a short-term loan.
The process begins by selling your invoice to a lender; who will give you a loan based on the invoice you are waiting for – they will take back the money lent out once you receive the initial invoice.
A very important aspect of invoice finance is that it is a secured loan. This means that if you fail to make a payment, your initial invoice can be used as ‘collateral’ –a way for the lender to pay off the loan payment you have missed.
Why is it beneficial?
- Your payment will be given to you within a day – rather than waiting for 30 or more.
- The quick financial return could help take the pressure off payments in these trying times of COVID-19
- Can be used to enhance cashflow
- Could help to combat late payments, helping with growth and avoiding bad credit
- Is ideal for any size organisation, whether just starting out or an established business
- Available to any sector of work
Am I eligible?
To qualify for invoice finance, you must:
- be a Limited Company.
- you must make sure you trade with other businesses rather than consumers.
- Your minimum turnover must be over £50,000.
- You are registered in England or Wales.
Most businesses located in England or Wales are eligible for invoice finance. You should check for any other stipulations with your lender that could affect you qualifying.
If you would like to find out more or feel you would like to set up invoice finance for your own company; please feel free to contact us for a free informal chat – and we will try and help you out as best we can. Get in touch today!