For companies and entrepreneurs in need of capital, invoice financing can offer an ideal solution to your problems. It’s lower risk and more flexible than many of its borrowing alternatives, which is why it’s becoming an increasingly popular funding avenue for companies.
However, many people remain unaware of its existence. They’re entirely unfamiliar with the concept, or how it could help them. To summarise, invoice financing is a way of borrowing capital against outstanding invoices. It takes one of two forms – factoring or discounting – lending it a flexibility that means it suits almost every business around so long as you are bringing in a profit and collecting invoice payments.
If you’re looking to grow your business and are considering your borrowing options, here are three reasons why you might like to add invoice financing to your list.
1. Low-Risk Borrowing Option
One of the main benefits of invoice financing is that it’s much lower risk than many of its counterparts. This is because of how it works – the capital you borrow is levied against your outstanding invoices.
This means that should your business experience difficulties, you won’t stand to lose your home or company itself since you don’t need to put any collateral up.
Rather, once the invoices come in, your provider will take their cut from these, which means that they only ever dip into funds that you can afford to spare.
2. Prevents Your Debts from Mounting
Another benefit of invoice financing is that borrowers don’t become indebted in the traditional sense of the word. Rather than accepting the money in the hopes that you’ll be able to repay it when you profit in the future, you’re accepting the money on the basis of invoices that you’re already owed. There is no question that you could easily fail to make minimum loan payments or get buried in interest.
With invoice financing or a working capital loan, you’re simply gaining access to money that will be yours prematurely, in order to keep your cash flow moving.
3. Gives You Access to Financial Professionals
A further advantage of invoice financing over other borrowing options applies to invoice factoring specifically. When you contract with a provider, you not only gain access to funds but also to a team that will take care of your invoice ledger for you and chase up any late payments.
This takes the burden of doing so off your hands, freeing up you and your staff members for more important tasks. Think of it as a payday cash advance without the gigantic 300% interest rate. Fundbox and Paypal offer quality and affordable invoice financing options with quick approvals and no credit checks.
If you need money to grow your business and you are already accepting payments, consider invoice financing over a traditional loan. The repayment terms may be shorter and the loan amounts are likely to be smaller, but it’s a straightforward way to obtain the funds you need and get them paid back quickly.