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The 6 things you need to know about invoice finance

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The government recently made invoice finance accessible to thousands more businesses. Rangewell's 6-step guide tells you everything you need to know about this new method of funding.

Rangewell is an independent platform that has the UK business finance market mapped. Over 200 lenders and 5,000 products are rated, reviewed, and available through our portal, which expertly provides businesses and their advisors with funding options tailored to their needs.

Published in: Economy & Finance
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The 6 things you need to know about invoice finance

  1. 1. Invoice Finance T H E 6 T H I N G S Y O U N E E D T O K N O W
  2. 2. IT'S A WAY TO GET PAID QUICKLY Invoice finance is a method of obtaining cash advances on a business' unpaid invoices. The business will receive a percentage of the invoice's value up­front, meaning that they won't have to wait the typical 30­90 days to receive the money they're owed.
  3. 3. IT'S A SIMPLE 3-STEP PROCESS 1. A business will send an unpaid invoice to a finance provider 2. The finance provider will give the business a percentage of the invoice's value right away 3. The original recipient will have the usual amount of time to pay the invoice
  4. 4. INVOICE FINANCE CAN BE SPLIT INTO THREE DIFFERENT TYPES: INVOICE FACTORING, INVOICE DISCOUNTING, & SUPPLY CHAIN FINANCE
  5. 5. INVOICE FACTORING A finance provider will advance 85­90% of an unpaid invoice They'll charge the business a one­time arrangement fee, a monthly fee, and a charge based on the amount of funding that was advanced The finance provider will be responsible for collecting the payment from the original recipient of the invoice Because of this, invoice factoring can be preferred by small businesses without their own collection teams
  6. 6. INVOICE DISCOUNTING The same percentages are advanced and the same fees are charged in invoice factoring and invoice discounting With invoice discounting, the business is responsible for collecting payment, not the finance provider This means that invoice discounting is more attractive to larger businesses with in­house collection teams Invoice discounting can often have lower rates than invoice factoring
  7. 7. SUPPLY CHAIN FINANCE A business' supply chain is its network of suppliers and clients Supply chain finance is a cash advance based on the credit rating of a business' supply chain, rather than its own credit rating This means a business can often benefit from lower rates and better terms because of the higher credit rating of the businesses it deals with
  8. 8. INVOICE FINANCE IS NOW AVAILABLE TO THOUSANDS MORE BUSINESSES Previously, clauses in contracts that were meant to prevent subcontracting also made it difficult or impossible to access invoice finance, but new legislation from the government has changed that. It's still possible to prevent subcontracting, but contracts can't restrict access to invoice finance any more. That means that invoice finance is now available to thousands more businesses.
  9. 9. THIS PRESENTATION WAS BROUGHT TO YOU BY FOR MORE INFORMATION ABOUT INVOICE FINANCE AND OTHER SOURCES OF FUNDING FOR SMALL BUSINESSES, VISIT RANGEWELL.COM

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