What Is Invoice Finance?

If you run a company, no matter what size is or what industry it is in raising money can be a challenge. However, many firms over look an obvious solution in the form of invoice finance. A surprising number of companies have never heard of this form of financing let alone used it. This is surprising when you consider how easy it is to use and that many large blue chip firms raise money this way.

As the name suggests invoice financing is when you borrow money for your company using what your clients owe you as collateral. Some finance firms will lend you up to 90% of the face value of your invoices meaning that it is a powerful way of raising money.

Why Use Invoice Finance?

The main reason you should find out more about invoice finance is that it is a quick way of raising funds. Unlike when you apply for finance from many other financial institutions, you do not have to present a business plan, fill in loads of forms and wait an age for a response.

The finance firms who lend you money in this way know that you will be paid what is owed to you and when you are paid, they will be paid too. Of course, they carry out some checks and will occasionally turn people down. For example, if some of the clients who owe you money have a poor credit history they are unlikely to lend you anything against those particular invoices.

Invoice financing is a very flexible way of borrowing money especially for the short term. It is a great way of dealing with cash flow issues or raising the funds you need to take advantage of a new business opportunity and stay ahead of your competition.

How to Arrange Invoice Finance

To arrange invoice finance all you have to do is to find a financial institution that offers the service and speak to them. You can find firms who do so online or by speaking to other firms within your industry who already raise money this way.