Invoice Factoring Provides Quick Cash Flow Solution


Invoice factoring is the best service in the business world that provides an immediate and flexible solution for overcoming cash flow hurdles. We explore the question “what is invoice factoring?”

Quick notes if you’re in a rush

  • Invoice factoring is an immediate fund solution for companies that invoice their clients.
  • As invoice factoring takes the customer (debtor) as security, it offers a workable solution to complement existing finance arrangements.
  • An invoice factoring solution can be set up in advance in a reserve facility, to let you to use the funds even faster should the need arise. If there’s no require for the fund – there’s no cost.

What is invoice factoring?

Term invoice factoring has many other names: like invoice finance, invoice discounting, cash flow finance, debtor finance, debtor factoring or online exchange for trade receivables etc.

In a few simple words, invoice factoring is a simple financial process where a company sells their invoices to an invoice factoring company. These invoice factoring companies receive approx 80- 90% percent of the value of the invoice and the rest when their clients pay the invoice in full, minus any fees or charges.

Invoice factoring efficiently eliminates the need for companies to wait for the cash they have already received. As they have a requirement now, they can trade their outstanding bills and gets the funds immediately.

Who does Invoice factoring work for?

Invoice factoring is the best option for every company no matter sizes, types, established or new. The only real criteria are that company has to state their clients for payment.

In detail it works well for corporations who:

  • Deal with long payment terms from customers
  • Manage irregular cash flow, for example, seasonal businesses
  • Have development opportunities that need more cash flow
  • Can advantage from before time paying supplier discounts
  • Are new and/or developing, and can’t access traditional lending facilities
  • Have a high attentiveness of their production with one or more clients

Why is invoice discounting so flexible?

Actually, invoice factoring takes outstanding invoices of Borrower Company as security. On the other hand, traditional lenders as banks tend to look only fixed assets as security, just like in real estate.

On the other hand, invoice factoring only takes the debtor as security it shouldn’t impact your existing financial planning, and also available immediately. So as a company you need immediate cash and you have outstanding invoices then Invoice factoring is the better choice.

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