No matter whether you're a new to market SME or an established nationwide operation, trying to overcome the financial burden of late payments can put a huge strain on the day to day running of your business.
Aside from being a leading cause of restricted cash flow, chasing up unpaid invoices and sourcing viable solutions are an unwelcome drain on resources which would ideally be applied elsewhere within your organisation.
Invoice financing is specifically designed to help businesses deal with these cash flow gaps, offering a range of options to help you quickly and easily access capital when you need it most.
Before we address how invoice financing can help you to overcome late payments, let's take a look at the two main invoice finance options available – invoice factoring and invoice discounting.
If your company invoices other businesses, these options can provide an advance of up to 95% of the value of your outstanding invoices. There are some key differences to consider when deciding which option is likely to be most suitable for you.
Invoice factoring companies offer a complete credit control service, advancing you a percentage of your issued invoices and overseeing your sales ledger to ensure that outstanding payments are made in a timely fashion.
By dealing directly with your clients on your behalf, they can help to free up valuable time which you would usually have to spend chasing these balances.
Invoice discounting is only available to businesses with outstanding commercial invoices. Unlike invoice factoring, you'll retain complete credit control over these outstanding payments and will continue to liaise with your customers directly.
At Capitalise, our state of the art finance matching platform can help you to discover mainstream and independent lenders across both options to improve the speed at which your invoices are paid, removing the cash flow gap that can come from late payments.
There's nothing worse than being caught short when it comes to paying a supplier, all because you're stuck waiting for other clients to settle their own invoices. Integrating an invoice finance lender into your business model will help you to significantly reduce the impact of late payments on your cash flow.
Rather than having to wait weeks or even months for each invoice to be settled, invoice factoring companies can release up to 95% of these invoice amounts to your business within as little as 24 hours. Although a small fee will be payable to these lenders for their services, the peace of mind that comes with having your invoices paid immediately can significantly outweigh the costs involved.
Remember – this shouldn't be viewed as a debt collection service. Invoice factoring companies will work with the accounts receivable teams at each business you've invoiced to establish an ongoing relationship, developing stringent payment processes to help ensure that payments are made promptly in future.
As well as taking on the task of dealing with late payments from your existing customers, the credit control services provided by factoring companies will also carry out extensive credit checking on new customers looking for credit.
This can be a priceless resource which will help you to determine the invoice terms and credit limits you should look to offer new trading partners, giving you an indication as to how likely it will be for each new company to pay you on time.
This feature doesn't just extend to new businesses that you take on. Ongoing credit checks will ensure that any significant drop in credit score from your existing customers will be picked up on, helping you to make adjustments to any agreed credit limits as time goes on.
Capitalise works with more than 70 lenders from across the UK, many of whom offer a diverse range of invoice finance options to specific sectors. It takes just a few minutes to complete an online application which will be used to match you with a lender best suited to your needs.
Discover a great new way to manage your invoices and limit cash flow gaps today with Capitalise.com.