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Late payments from clients can lead to major cash flow issues for B2B businesses. Blips like this can lead to big problems with your invoices. One of our invoice finance facilities could be the solution you need to free that cash tied up in late invoices and get your cash flow back on track. This is even more important if your business is growing, as growing businesses are always “cash-hungry”.
What is invoice finance
Invoice finance is a general term used when a third party agrees to lend you money based against the value of your unpaid invoices. A factoring company will advance money, normally between 70-90%, worth of your unpaid invoice. Once collected, the factoring company will proceed by taking what they’re owed along with their fees, before returning you the remaining balance.
There are two main types of invoice finance, factoring and invoice discounting. These different options can immediately release cash and potentially ease cash flow issues.
Why should my business use invoice finance?
Invoice finance can be a brilliant way to release funds to the business. We can help you get up to 90% of an invoice, released to your business within 24 hours. If you’re having problems with cash flow, growth or even spending enough time working on the business, then using an invoice finance facility, could be the solution to all those problems.
Our invoice finance services
Within our invoice finance options are, factoring, invoice discounting and spot factoring/ single invoice factoring. Although all are similar each is slightly different.
- Factoring – Factoring is a service where a lender makes an advance to your company, based upon the value of your invoices. Typically, they will lend up to 90% after assessing the quality of your invoices. The factoring company will then collect your invoices for you, before claiming what they are owed along with their fees and then returning the remaining balance to you.
- Invoice Discounting – Invoice Discounting works in a very similar way to factoring. However, it is normally for larger, more established businesses who want a confidential facility whilst retaining their own credit control function. During the process of invoice discounting, the business will collect its own invoices, accounting to the factoring company for any amounts due.
- Spot factoring/Single invoice – This is a relatively new product in the UK and can act as a stop gap. Spot factoring provides you with working capital in exactly the same way as factoring and discounting. It is designed to meet one-off cash flow shortages and doesn’t require the same long-term commitment. Companies requiring regular facilities will find full factoring or invoice discounting more cost-effective.
What sort of businesses use factoring and discounting
Although both are similar, typically the two services will be used by very different types of businesses. Users of factoring are generally younger, smaller businesses – often with ambitious growth plans. They may welcome the fact that the factor will manage the ledger and collect invoices. In the right circumstances it is available to start-up businesses. The cost of factoring is generally greater than invoice discounting.
Larger, established companies who want to be discreet about the fact they are using a factoring company, will tend to use invoice discounting. This gives them that little bit of privacy when collecting invoices and allows them to have more control when it comes to collecting. As the company is not being charged for credit control services and is an established business, it generally costs less to use invoice discounting than factoring.
Some of the partners we work with...
From a funders perspective, I find that the team at WF Financial Solutions, really take the time to understand the customers’ needs and wants and with their vast experience are able to match them with the correct funders. This really helps the funders to build a fast and trustworthy relationship to ensure any facilities are provided in a timely manner.
- Wayne Spratt, Business Development Manager, Bibby Factors Yorkshire
Why choose us?
WF Financial Solutions is an independent broker of invoice, asset and trade financing solutions with links to lenders of all sizes and specialties. WF Financial Solutions has helped many clients through a range of lenders and their varying services and we are proud to offer advisory and introductory services to finance providers that suit your needs.
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