Invoice Financing
Invoice financing is a simple solution to the financial problems of many businesses. Better known as invoice factoring, the method allows businesses to avoid high interest bank loans by allowing them to turn their unpaid invoices into real capital. By factoring your invoices at a discount, you are able to turn outstanding customer debt into cash flow for your business. You can use that cash flow to cover your business expenses, payroll, equipment and supplies, and anything else that you need to operate your business.
Simply put, you “sell” your invoices at a discount to a factoring firm. These discounts start at under one percent. The firm finances your business within days and you have capital to stay fully operational. As long as the outstanding invoices are paid by your customers within a predetermined time period, you can continue to factor as many invoices as you like and turn them into cash flow within a matter of days. If the invoices are not paid within the time limit, you are responsible for whatever sum is left unpaid.
Invoice factoring is a cheaper solution than flat out selling your invoices or invoice discounting. Outside of factoring, companies are also able to leverage their outstanding invoices for loans from special firms or can sell the invoices outright at a discount meaning that you will not be responsible for the unpaid portion. Borrowing against your invoices can sometimes still result in a high interest rate and selling invoices outright carries larger discounting.
With so many businesses looking for alternative ways to finance their operations without taking out loans, invoice financing is an attractive alternative solution to your financial problems. Pay your employees, cover the equipment and supplies that you need, and keep your company running using only the business that you have already done.