Does your business need an injection of money to help with expansion or a project? Would additional cash flow help to make the day to day running of your business easier? If so, invoice finance could benefit you and your business. At Davies Corporate Finance, we can guide you through the various invoice financing options available, taking into account your individual circumstances to find the most suitable service for you.
From transport firms and manufacturers to business service providers and wholesalers, Davies finance has experience of advising a range of businesses across the UK. With this varied customer base we are ideally positioned to provide tailored financial advice about the two main types of invoice finance available; Invoice Discounting and Invoice Factoring. Each option will allow you access to funds owed to you by your customers, but the option you choose will depend on whether or not you have in-house credit facilities already in place.
INVOICE DISCOUNTING allows access to an agreed percentage of the funds owed to you by your customers and is suitable if your business already has established credit control facilities and good financial control. It may also be of particular use if you sell products or services on credit.
HOW IT WORKS
- You send the finance company the invoice details and they advance the funds to you – usually 85% of the total outstanding sales ledger.
- Once your customers have paid you, the finance company will forward you the remaining amount.
- Unpaid invoices can be managed by the finance company if required.
ADVANTAGES
- You will retain control of collection of invoices and your customers won’t know that you are using an invoice discounting facility. This makes sure that you maintain a close relationship with your customers.
DISADVANTAGES
- This service may affect your eligibility to get other funding because it will reduce the amount of ‘book debts’ you have available as security.
- Some finance companies will only offer this service to companies who sell commercially, rather than to the public.
INVOICE FACTORING is ideal for smaller businesses looking to outsource invoicing, and still gives you access to money owed to you by your customers. You won’t have to worry about chasing payments and the finance company can even pre check new customers’ credit history.
ADVANTAGES
- Outsourcing financial administration will free up time
- Credit check facility ensures reliable customers
DISADVANTAGES
- Customers may prefer deal with you rather than a finance company about their invoices
- Poor service from the finance company will reflect badly on your business.
For more information about the most suitable type of invoice financing available for your business please contact Davies Finance today.
