Invoice Discounting

It’s a common problem for businesses. Money is constantly flying back and forth between customers and creditors, but the outgoings always seem to be required before the payments have arrived.

If you find your business is consistently hanging on for the end of the month to get hold of extra working capital, there are some solutions out there for you.

It’s clear that you have the sales ledger to pay off your outgoings, so there’s no need to panic. It’s just a case of timing.

Wouldn’t it be great if you could get your hands on the cash as soon as you’ve sent out your invoices? Wouldn’t that solve a huge number of problems? Welcome to invoice discounting.

What is Invoice Discounting?

Invoice discounting is a service that helps you to cover the shortfall between in and out payments.

You can take confidential, short term loans against the value of your unpaid invoices and, in that way, cover the gaps in your cash flow.

Your company will retain complete control of the invoices and will need to chase up any non payments as per usual. Invoice discounting is a useful way to avoid bank loans and overdrafts, and can be flexible to suit your business needs.

If you need a new piece of machinery, or are expecting higher outgoings in a month for some reason, invoice financing can give you the extra cash injection to ride the wave of outgoing payments.

Advantages and Disadvantages of Invoice Discounting

As with most finance packages, there are pros and cons that come with invoice discounting. It’s worth exploring these to see whether invoice financing or a different type of financial assistance will be your best option. Either way, BusinessFinance.org will be there to help.

Advantages

There are a number of advantages to invoice discounting. It can help you to:

Improve your business’s cash flow.
Reduce interest payments on loans.
Keep any loans confidential.

The main advantage of invoice discounting is that you will have access to a short term loan very quickly. This money will improve cash flow, and give you extra capital to work with so you can meet your creditors’ demands.

As you retain control of your invoices, you’ll only have to cover the interest on money that you actually borrow. This differs from debt factoring, where you have to pay interest on every invoice. This provides increased flexibility.

You can also be sure that your loan will be kept confidential. Suppliers and customers will not be aware that you are experiencing any short term financial difficulties, so there will be no risk of damage to your reputation.

Alternatives Available

Before entering into an invoice discounting arrangement, you should always seek professional advice and study the alternatives. When you contact BusinessFinance.org, we will analyse your current situation with you and decide whether this kind of financing is the most effective option for your business.

Invoice discounting tends to be a short term solution for businesses, and you don’t want to find yourself in a situation where you rely on the loans to boost your cash flow indefinitely.

As a rule of thumb, invoice financing is usually the best option if your business is in relatively good shape. If you’re still receiving a high quantity of orders and have money coming in each month, the service is an attractive short term solution that can help you to avoid the prohibitively high interest rates that many high street lenders offer.

If your business is struggling, however, we offer a whole portfolio of alternative finance packages. These range from repayment agreements with your creditors through to help from an insolvency practitioner.

Is Invoice Discounting for My Company?

If you’re unsure of whether invoice discounting is for you then get in touch. We’ll give you free confidential advice that will help you to reach the correct decision for your company.

Our team are highly trained and experienced in all areas of financing. If we decide that invoice discounting is not the best option for you we will be honest and work with you to find a more appropriate solution.

BusinessFinance.org works with the leading names in the industry to give you the best choice of trusted lenders in the country.

We’ll help you to find the best invoice discounting solutions with the lowest rates around.

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