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Calculation of invoices using invoice finance

Invoice Finance is perfect for fast-paced growth

Invoice finance can make your cash flow match your current sales ledger, without having to rely on someone else’s payments: crucial if you work in a fast-paced sector that needs to be responsive to the latest trends.

It is one of the easiest ways to speed up and maintain your cash flow. With invoice factoring and invoice discounting, you will see up to 90% of your invoice, as soon as you issue it.

This is especially useful if you work in a sector such as retail where you need to snap up new stock or supplies at the best prices, but your clients don’t turn their invoices around quickly enough. It also works well in a technical field, where you need lots of equipment to fulfil large contracts.

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Definition of invoice finance

“Invoice Finance (invoice factoring and invoice discounting) is an arrangement where invoices are purchased by a third party for a fee, in exchange for immediate release of funds. The third party may be a bank or an independent financial provider.”

Types of Invoice Finance

If you’re wondering about the difference between invoice factoring and invoice discounting, it’s actually very straightforward. With invoice discounting, you issue an invoice, send your lender a copy, and they’ll pay you up to 90% of its value. When the invoice becomes due, you take full control of chasing it so your client relationships remain in your hands, and you send your lender the advance that they paid along with a small percentage fee. The types of invoice discounting we can source include:

It’s worth bearing in mind that Invoice Finance isn’t for all businesses. Usually, lenders will only buy commercial invoices, so if you generally sell to the public, Invoice Financing may not be for you. The good news is that if you do have commercial invoices, and you decide that Factoring is for you, then lenders will generally credit check your clients as part of their decision to accept the invoice. This means  you are more likely to deal with better-paying businesses in the long run.

If you choose invoice factoring, the lender can act as your credit control, freeing up some of your internal capacity so that you can concentrate on running your business. At Access, we can also offer a full credit control function. Including issuing invoices and chasing them when they are due. (which is carried out in a discreet, friendly way so that we don’t impact on your existing customer relationships.) When we have collected the balance of your invoices, we send you the remainder that’s outstanding, after our original advance and a fee.

In the post-recession climate, invoice finance can be a saving grace– it means you are not reliant on someone else’s cash flow to maintain your balance, and you don’t have to turn down lucrative opportunities because of a lack of working capital. It’s important to remember that whilst Invoice Financing is a great tool, you won’t get 100% of the value of your invoice, and there are fees and interest involved. So if you need to maximize your revenue, we may need to look at an alternative product for you. However, it is still a fast and simple way to quickly free up working capital on an ongoing basis, and because you are effectively selling your invoices, you will not need to be assessed before approval, and the responsibility for unpaid invoices remains with your client, not with you.

For every business, it’s an inevitable fact that a small percentage of invoices will never get paid, due to client insolvency, but with invoice factoring that worry is taken out of your hands. If we can’t collect payment even after our best attempts, as a last resort, we can make a claim against our credit insurance policy.

Invoice Finance tailored to your needs

With invoice finance, we like to get to know your business – our clients appreciate that we understand the way they operate and when the peaks and troughs in their sales are likely to occur. Invoice finance is provided as a revolving facility, so when one invoice is paid it frees up more credit to use as and when you need. To assess how much finance we can offer, we look at your whole sales ledger, across a full year, rather than just one invoice, so we can base our package on your typical sales performance.

Invoice finance is ideal for businesses with a fast turnaround of stock, such as retail suppliers, or industries with typically long payment terms. It can also speed up cash flow for any company that has regular ebbs and flows in its trade. Some of the solutions we have provided include:

  • Invoice finance for toy and merchandise suppliers
  • Invoice finance for advertising companies

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Contact us today to find out if we can provide the cash injection that you need to put your ambitions into practice.

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