Unpaid invoices can affect the smooth operation of a company. A good way to keep the business running efficiently is to apply for invoice financing. Here are some critical things you need to know about invoice financing:
What is invoice finance?
Invoice factoring and invoice discounting are both ways of releasing funds from your unpaid debts. The key difference between these two methods of financing is the party in charge of chasing the clients. In invoice factoring, the financing company will follow up on the clients and take control of the sales ledger. On the other hand, if you choose to get financing through invoice discounting, your business will still chase clients for the unpaid bills.
What percentage of my invoices can I borrow?
The amount you can borrow depends on your sector and circumstances, the average is 85% of your outstanding debtor ledger for many businesses. However specialist sectors such as construction can be 50% whilst temporary recruitment can be as high as 100%.
Will my clients know that I am using Invoice Financing?
Invoice Discounting – Your clients are less likely to find out about your financer if you opt for the invoice discounting option. This is because it is your company will be required to chase their unpaid invoices by retaining the credit control function. Usually invoice discounting is only available for larger businesses but we have access to funders that consider smaller businesses.
Invoice Factoring – Your clients are likely to find out that you are using invoice financing with the invoice factoring option. Also, the financing company will follow up with your customers, this can be of huge benefit to smaller businesses as it means you can outsource credit control rather than having to hire a member of staff.
Do I need a credit check to get started?
The financer will not always need to check your credit score. Any checks are to establish identification and if you have poor credit many lenders accept this as long as the debtors are of good quality and there is a strong paper trail in the business. In many cases it is far easier to obtain invoice finance than a traditional loan.
When will I get my money?
Once the contract is in place and ready the funder will usually advance the money within 24 hours. It is important to note that you will only get a percentage of the invoice value upfront with the rest of the money will be sent as soon as your client pays the debt.
How do I get started?
To get started, you simply need to fill in the quick quote form on the Beacon Finance website. You will then receive a free review and quotation.
Invoice financing can help you run your business smoothly, even with many unpaid bills. If your customers prefer to deal with you directly, you can choose to apply for invoice discounting. If you don’t want to chase your customers for the debts, you will be better off going for the invoice factoring option.