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5 ways invoice finance can help your business

As we move towards a post-pandemic future, many businesses will be looking for a cash injection to help them build back better.

Here are five ways invoice finance can help your business ease cashflow, fund future projects and grow in the coming months.

Access cash fast

Securing a business loan can be a slow process. In April 2021, the Government introduced the first iteration of the Recovery Loan Scheme (RLs) to fill the void left by the Bounce Back Loan scheme (BBLs) and the Coronavirus Business Interruption Loan scheme (CBILs), which both ended on March 31st, 2021. But with many alternative lenders still to be accredited, it’s unclear how effective RLs will be in delivering cash to businesses quickly.

The benefit of invoice finance is that it’s fast and relatively hassle free. It can integrate with your accounting software and use open banking to make the process even faster. Often, you will receive funding within 24 hours of approval.

Grow your business

As the economy kickstarts after months in lockdown, your business might be low on cash. Without reserves in the bank, it's difficult to fund new projects, meaning you could end up turning down work and stunting your company's growth.

If you find yourself in this situation, invoice finance can help by giving you the cash you need to scale your business.

If you need cash to support your expansion funders can provide a range of services from single invoice to whole ledger. These arrangements can be disclosed or confidential. Funders are happy to support expanding business even where the balance sheet is stretched.

Offer more generous credit terms

After a challenging year, your customers may need longer to pay. If you have a trusted client who you’re happy to offer longer credit terms, invoice finance can help you keep your cash flow on track while you wait for payment.

By offering trusted customers longer credit terms, you may find you’re able to secure more work. Always credit check your customers before offering generous credit terms to protect your business from late payments and bad debt.

Access funds without assets

Business loans will generally require security. If your company has assets, such as property or equipment, you can use them as collateral when applying for a loan. If your company does not have assets, the lender may ask to use personal assets, such as your house, as security.

The great thing about invoice finance is that it is unsecured lending. You may be asked to sign a debenture or personal guarantee, but funders won’t normally take a legal charge over your home. That's because the invoice itself serves as security. As long as your invoices are within payment terms and your customers have a good credit score, you can advance up to typically 85% (sometimes more) of their worth without putting your personal assets at risk.

Stay flexible

If you don't want to be in debt for months or years, invoice finance can be the answer.

There is a wide range of products to suit your requirements. Some may be short term with no tie ins, while others may ask you to sign up for a longer period so that you can benefit from lower costs.

Whatever your industry from manufacturing, distribution, wholesaling , construction, recruitment (and many more!), for help please contact us.

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