Invoice finance is a way of releasing cash that is tied up in a company’s debtor book (unpaid invoices). The lender takes security over the unpaid invoices and releases a percentage of the invoice value to your business. There are multiple options available, from lending against 1 or a couple of specific invoices, or just lending against a specific debtor to lending against the whole debtor book. You can opt to borrow for as little as a few days, to having the security of a facility being in place for a few years. It really can be as flexible as you would like it to be. A typical example as to how this could improve your small business finance would be if you offer your customers credit terms of 60 days, but you have to pay your suppliers in 30 days, there would be a cashflow timing difference and this could put pressure on the company’s cashflow or prevent growth.
At Prosperity Commercial Finance, we understand that these types of facilities can be complicated and have many factors to consider. We are here to guide you through the invoice finance advice options, make sense of any finance jargon and help to make the decision-making process as simple as possible.