Invoice Finance

Invoice Finance helps improve cash flow by providing an immediate injection of cash into the business against the value of outstanding invoices. This gives the business access to an ongoing supply of cash linked to sales. As the business grows, so does the amount of funding available.

What does it do?
When an invoice is raised, up to 85% of the value of that invoice is released within 24 hours. The remaining 15% is paid, less a small service fee, once payment is received from the customer. There is also an option to outsource credit control processes including chasing and collecting payments.

Why I need this
Invoice Finance is the ideal solution if cash flow suffers while you wait for customers to pay invoices. Unlike overdrafts or loans, it provides a flexible supply of working capital linked directly to sales. It improves profitability as you can pay suppliers earlier, buy in larger quantities and benefit from volume discounts.

How does it work?
Poor cash flow is one of the main reasons for business failure. Invoice Finance releases the value tied up in unpaid invoices by helping to bridge the gap between issuing an invoice and getting paid and helping to ensure cash runs smoothly into the business.

You can opt for a full collection service which includes sending out statements, making reminder calls and collecting payments. The advantage of this service is that not only does it save costs on postage, stationery and telephone calls but it can save significant amounts of time enabling you to concentrate on growing the business rather than chasing payment.

You can also benefit from 24-hour internet access to track customers’ payments online and see at a glance the amount of funding available.

What else should I know?
There is also an option to add bad debt protection, which in the current economic climate is invaluable and means that if one of your customers becomes insolvent, the Invoice Finance provider takes responsibility for the bad debt, ensuring you get paid even if one of your major contracts fails.

Another point to note is that if you would rather your customers did not know you are using Invoice Finance, you can opt for a Confidential Invoice Finance facility. This provides an integrated funding, invoicing and specialist collections service with all correspondence (written or verbal) in your name.

Further information
Bibby Financial Services
Asset Based Finance Association

By David Robertson
Chief Executive, Bibby Financial Services