For businesses looking to fuel their long-term growth, maintaining a steady cash flow is crucial.

However, in a turbulent economic landscape, small businesses across the country often face the brunt of such challenges. A recent study by Novuna Business Finance showcased that market uncertainty has risen from 36% to 45% in the past twelve months alone. With the impact of Brexit still hitting businesses hard and fixed costs on the increase, there are numerous explanations as to why cash flow can be restricted and, therefore, growth plans placed on hold.

In addition to the above pressures, irregularities can occur when customers delay payments and have cyclical challenges. In addition, cash flow can dip when there is an increased demand to invest in marketing or fulfilling new contracted opportunities. Whilst payment terms for customers are a normal part of business trading for many, they can create a gap for a completed product or service to generate income or cash for the company - potentially leaving businesses to fall short in other, important aspects of their operations.

A worry for many in the SME market then turns to the gap that then lengthens where late customer payments occur. In such scenarios, Invoice Finance can emerge as an effective solution to finance long-term growth.

So, what is Invoice Finance:

Invoice Financing is a form of flexible, short-term borrowing to fund immediate Working Capital.

Also known as Invoice Factoring or Discounting, Invoice Finance is an alternative funding solution that allows businesses to unlock immediate cash by using their outstanding invoices as collateral. Businesses can borrow money against the amount due on invoices that have been issued to their customers.

Here are our top benefits of Invoice Finance for SME Businesses, looking to fund long-term growth:

Improved Cash Flow:

Addressing the concern of stability of business growth, one of the primary benefits of an Invoice Finance facility is improved cash flow. Customers and businesses can receive a significant portion of the invoice value upfront from their finance provider to pay their invoices. This immediate injection of funds can be used to cover operational expenses, invest in growth opportunities, or manage any cash flow gaps.

Faster Access to Funds:

Compared to traditional funding options such as bank loans, Invoice Finance can provide a faster and more efficient way to access money.

Once the finance lender verifies the invoices, businesses can receive the funds within a matter of days - or even hours. This speed can be crucial for addressing immediate financial needs or taking advantage of time-sensitive opportunities.

A Flexible Financing Solution:

Invoice Finance is a flexible financing solution that grows with your business.

The funding amount is tied to the value of your outstanding invoices, so as your sales increase, your financing potential also increases. This scalability allows businesses to access larger amounts of capital as invoice volumes grow, providing ongoing working capital support, for a longer-term business solution.

No Collateral Requirement:

Invoice Finance is a form of secured lending where the invoices act as collateral. As a result, unlike the other facilities that we offer, there is no need for additional collateral such as property or equipment. This benefit can make Invoice Finance an attractive option for businesses that may lack significant physical assets to pledge as security.

Confidential Invoice Discounting:

Some Invoice Finance providers offer credit control services as part of their offering. This means their team will be responsible for managing the collection of customer payments, including credit checks, issuing reminders, and following up on overdue invoices. Outsourcing credit control can save businesses both time and resources, allowing them to focus on core operations.

Reduced Bad Debt Risk:

When using Invoice Finance, businesses transfer the credit risk associated with the invoices to the finance provider. This means that if a customer fails to pay, the finance provider typically bears the loss. This reduces the risk of bad debts and provides businesses with a level of protection against non-payment or insolvency of their customers.

Enhanced Supplier Relationships:

With improved cash flow through Invoice Finance, businesses can pay their suppliers promptly and take advantage of early payment discounts, therefore, strengthening supplier relationships.

In turn, this can potentially lead to better terms, improved purchasing power, and increased goodwill.

Is Invoice Finance Suitable for Your Business?

It is important to note that the specific terms, fees, and conditions of Invoice Finance can vary between lenders and providers. Businesses should carefully evaluate different options and consider their individual needs before deciding to pursue any form of alternative funding.

For more information on our selection of Invoice Finance facilities, please feel free to read through our Products and Services page.

Alternatively, please send an enquiry and one of our dedicated, friendly team members will be delighted to get in contact.