What are the benefits of invoice finance?

Running a business can be a difficult venture, especially when it comes to payments and invoicing customers. Given that it usually takes between 30-120 days for an invoice to be paid in full, many business owners can find the complications arising from this frustrating.

Luckily, invoice finance is an option available to all businesses which can help to greatly reduce the problems associated with invoice payments. Here are some of the major benefits offered by invoice finance.

No Waiting

Invoice finance, as offered by specialist firms and brokers like Touch Financial, involves a third party lender forwarding a business a large proportion of the value of any given invoice immediately (minus their fee). Once the customer has eventually paid the invoice in full, the lender then pays the small remainder of money to the business.

By using this service, businesses can completely cut out the frustrating waiting times which come with invoicing customers. As a result, they can get on with running the business without having to worry about when the next crucial payment will be made.

Cash Flow

One of the most significant advantages of cutting out this waiting time is that cash flow will be greatly improved. As one of the most important aspects of a business, having a good cash flow can often make the difference between success and failure (especially amongst SMEs).

Given that the business can always receive money for invoices immediately, they can then use the money to reinvest in themselves and fund further jobs/work which may come their way. This allows for slicker day to day operations and for businesses to have more confidence in their funding.

Growth

With improved cash flow and no waiting times between payments, businesses which use invoice financing services can expect to see healthy and accelerated growth. Although they lose some profits as a result of the small fee they pay to the lenders, the opportunities which they can seize as a result of having a regular, constant cash flow are likely to far outweigh the small cost of invoice financing.

Once a business has grown to a decent size, it is likely that it will no longer need to use invoice finance, as it should have enough customers and invoices coming in to sustain a healthy cash flow.

Invoice finance is a useful tool which businesses can make use of should they need. As always, it is well worth shopping around to find a provider which offers the most favourable fees and terms.