Cash flow problems even affect growing businesses. In fact it can cause a rapidly growing business to collapse.
Problems in your cash flow make business so much more difficult than it needs to be. You can’t expand your business properly, if it carries on your business will end up stagnating even though it should have been growing.
This can lead to lost opportunities or worse – your business failing.
Invoice Factoring is a financial package designed to solve this problem. Your business can be so different, with just a little help with the cash flow.
With an improved cash flow situation from Invoice Finance you can:
- Negotiate better terms with your suppliers
- Invest into marketing opportunities quickly
- Free up time for business development
- Expand your business without the worry of overtrading
Benefits of Invoice Factoring
So why is Invoice Finance so attractive? Why do so many of your peers use it (albeit quietly)
Well, in summary the advantages are :
- Lending that grows with your business – no new applications to complete
- No need for personal guarantees or security
- You outsource your credit control
- You can release money from invoices – as they are raised.
The hidden benefit of Invoice Finance
But let’s think about these for a moment.
You pass your invoices over to be paid on the day you raise them. When the time comes for payment, we chase your customer for payment. This means you don’t have to.
How much time does this save you?
Now what can you do with that time? Well you could go fishing or maybe take up a new hobby, but what if you focused on spending more time on sales? Or developing the business.
We find our clients that get the most of Invoice Factoring use that time for growing their business, whether through more sales, more marketing or product development.
Let’s look at an example of this.
Richard has an IT services company in the North West. Richard will be the first to admit that finance is not his strongest suit, at heart he is a salesman not an accountant, like a lot of business people. When we first spoke Richard was spending half his month chasing payments. It probably shouldn’t have taken all that time, but as it wasn’t his forte it took him longer than someone more adept.
We put a package in place within a week of first speaking. From that time on it meant he could focus on selling, which he found natural. This meant he was actually improving the profit level of his company as he was now bringing in more sales. His turnover went up by 40% in just 3 months.
So how does Invoice Factoring work?
Day 1 – You raise your invoices as normal. You send a copy through to us.
Day 2 – You can draw down your agreed limit (normally 85% of your invoice values).
Day 30 (or whatever your terms are) – We chase any outstanding payments. As these pay you can draw down the balance (obviously less the management fee – typically about 5%).
If they don’t pay then the money is recalled from future drawings.
Invoice Finance really is that simple.
Is it right for you?
Let’s get the facts straight – Invoice Factoring isn’t right for everyone, for many businesses there are other solutions to their cash flow issues.
- The companies that it works best for:
- Have a turnover more than £50,000
- Sell to other businesses
- Raise Invoices for work completed
As you can see for many businesses, Invoice Factoring is the right solution. But we have a duty of care to make sure it is the right solution before you get into it.
So what’s the next step?
Well the first step is a quote. This will make sure of exactly what Invoice Finance will cost you on an ongoing basis.
It is normal for an ‘off the shelf’ package to need to be tailored so cover everything you and your business need. In order to do this we will come out and get to know your business, this let’s us see how we can adapt a standard package for your needs.
With this set up, we can start the process in earnest. We will take copies of your invoices off you and process them. This will give you an instant access to funding from your historic unpaid invoices.
This all takes about a week. It can be done quicker, but this is a typically time period for getting everything set up and access to the funds that you need.
Invoice Finance on an ongoing basis
So it’s all set up – great, but how intrusive is it on a daily basis?
There is a little duplication of work (you will need to upload invoice for us to pay). Experience has taught us that it is better to do this on as you raise the invoices, and draw the money down as you need it. Rather than succumbing to temptation and thinking ‘I’ll upload the invoices when I need the money’ – this usually results in a pile of invoices that you try uploading when cash flow gets a bit short.