Beginners guide to invoice finance
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Beginners guide to invoice finance






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Beginners guide to invoice finance Beginners guide to invoice finance Presentation Transcript

  • Confused about Invoice Finance?
  • Invoice Financefor beginners What is Invoice Finance? Types of Invoice Finance available Myths Pros and cons
  • cash flow is essential to the success ofa business. . .. . . especially one that sells on trade credit terms.Invoice Financefor beginners
  • you find yourself waiting a long time for payment,this puts pressure on your cash flow.Plus, chasing for payment can waste valuable timeand resources.Invoice Financefor beginners
  • Invoice Finance is one way to help youmanage your cash flow.It can also save you time chasing for payment.Invoice Financefor beginners
  • is Invoice Finance?Invoice Finance is like a cash advance on yourunpaid sales invoices.You get an advance as soon as you raise aninvoice, even if it takes your customer much longerto actually pay.Once they pay you get the rest of the money,minus the fee for the advance.Invoice Financefor beginners
  • is Invoice Finance?It’s not the same as a loan – you’re simply gettingaccess to the cash you’ll be paid early on .Invoice Financefor beginners
  • Company ABC 1ABC completes goods or 2services, raises a sales ABC also sends theinvoice and sends it to invoice to InvoiceXYZ. 123 advances a Financier 123We’ll say it’s for £1000 % of the invoicefor this example to ABC. For example £800 3 123 now transfers the Customer balance minus Invoice XYZ fees. (£200 - Financier £10 = £190) 5 123 4 XYZ pays the whole invoice value. Invoice Finance for beginners
  • of Invoice FinanceThere are lots of variations of Invoice Finance butthey can mainly be classified into two main types: Factoring Invoice DiscountingThe biggest difference between these two types ofInvoice Finance is whose job it is to chasecustomers for payment.Invoice Financefor beginners
  • Discounting‘Invoice Discounting’ is the basic cash advanceservice. All the work of making sure yourcustomers pay their invoice still falls to you.Factoring‘Factoring’ is the cash advance service plus creditcontrol. The Invoice Financier takes on the task ofchasing each invoice and collecting payment.Invoice Financefor beginners
  • Invoice Finance Myths
  • 1Businesses who use Invoice Finance aren’t doingvery well, so it’s a sign of distress.Times have changed! High street banks are nowactually encouraging their customers to changethe way the way they manage their money and aresupporting the move from overdrafts to invoicefinance facilities. It’s actually great for growth firms,as it grows with your business helping you handlebigger projects and bigger clients.Invoice Financefor beginners
  • 2Using Invoice Finance will be harmful for customerrelationships.Not true! If you are worried about keeping thepersonal touch with customer relationships, youcan keep control of the collections process. And ifyou do opt for Factoring then having a professionaland experienced credit control team can be apositive, not a negative.Invoice Financefor beginners
  • 3All Invoice Finance companies are the same.Just like any other market, there is a big variationacross companies, and there are many differentviews and risk appetites.Compare Funding will search the market to findthe most suitable company for you.Invoice Financefor beginners
  • and cons Flexible – generally grows with Invoice Finance won’t help if a the business in line with business does not have a turnover sustainable business model Good for growing companies i.e. profits being made Releases cash tied up in the True costs can be difficult to asset of the business predict as charges are based Factoring can help if you on turnover and the amount of struggle or don’t have time to cash utilised by a company collect outstanding monies Some finance companies have Overpayments can be lengthy notice periods and requested at relatively short terms so you need to read the notice to assist with fine print. unforeseen cash flow problems.Invoice Financefor beginners
  • Use Compare Funding to get an Invoice Finance quote