Invoice Discounting has been gaining popularity as a way to finance a growing business. Invoice Discounting is essentially a financial tool that allows you to finance your slow-paying invoices from creditworthy customers.
Using your invoices as collateral, the finance company advances funds to your company – providing you the resources to pay important expenses. Ultimately this enables you to trade – pay your workforce, buy stock etc.
Invoice Discounting has the following advantages:
- Improved cash flow. The most important advantage of invoice discounting your invoices is that your cash flow improves – putting you in a better position to cover company expenses.
- Extend payment terms with confidence. You can extend 30 to 90 day payment terms to customers confidently because you do not need to wait that long to get funds out of your invoices.
- Easy qualification requirements. Unlike other business financing solutions, invoice discounting is relatively easy to qualify for. Most companies that have solid customers and do NOT have major problems should qualify.
- Quick funding. Funds can be released within 24 hours, allowing you to respond quickly if your company is in a crunch.
- Line flexibility. Since the line is based on your invoices the line can grow and adapt to increasing revenues. This important advantage provides a financial platform that can support growth.
- Simpler application. Invoice discounting has a simpler application process that most other solutions because you can discount, one, some or all of your invoices.
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Here’s an examples of the Invoice Discounting that 1st Business Finance have worked on with a client –
The client had been in business 15 years, installing and maintaining high access signage and illuminations nationwide.
They were struggling with getting payments in due to time constraints and turned to 1st Business Finance for help for a facility that offered an opportunity for growth and higher levels of customer service excellence. The client was seeking a provider who had a strong understanding of their business model and future growth requirements. The lender worked together to tailor a package that would help the organisation reach its business growth. In addition, bad debt protection was put in place to safeguard any risk of potential bad debt from customers.