Having a revolving line of credit for business is one of the best ways to keep balance sheets and cash flow healthy. A business can use this type of financing option to pay for what they use, such as materials, labor, or rent. However, invoice financing is one of the best forms of credit for both businesses and its customers. By locking in payment plans for customers or allowing longer payment terms, businesses can set flexible terms for when their customers can pay while they get paid upfront. Here’s why invoice finance is the best solution that helps keep both your customers and cash flow under control.
What is Invoice Finance?
Invoice finance is a type of financing that businesses use to settle invoices immediately regardless of the payment terms for their customers. By simply choosing to use Selectpay’s invoice finance, businesses can get paid upfront while their customers pay the rest in line with the standard payment terms. This is a great option for businesses that need to keep managing their cash flow woes, as customers could pay in 30, 60 or even 90+ days, but your business gets paid first.
Types of Invoice Finance
There are a few different types of invoice financing, each with its own benefits.
Invoice factoring is one option for businesses that need to get paid quickly. With invoice factoring, businesses contract with a factor to borrow money from them and pay them back with the invoices they receive. The third party will buy the unpaid invoices to provide immediate cash flow to a business.
Whilst this is a popular way for businesses to finance their invoices, it’s probably not the best option. Most providers end up taking over the business’s entire book and charge a fee based on the book size, regardless of the invoice/s being financed,
Invoice discounting is a great option for businesses that prefer to get paid overtime. With invoice discounting, businesses agree to a discount on the invoice amount for a set period of time. This allows businesses to get paid overtime and eliminates the need to wait for customers to pay their invoices.
How Does Invoice Finance Work?
To apply for an invoice finance facility, a business just needs to complete a simple credit check once. After that, they can use the facility as and when needed up to the approved limit. And, because there is no credit check required for individual customers, the business can rest assured that their invoices will be covered.
Who Should Consider Invoice Finance?
Companies that want to give their clients a more flexible way to pay for invoices should consider invoice financing. This type of financing is also great for businesses that need to manage their cash flow effectively. Invoices are paid fast, and customers have the flexibility to pay on a schedule that works for them.
Get Started with Invoice Finance for Your Customers with Selectpay
Selectpay invoice finance allows your business to offer more flexible payment terms to your customers while keeping your cash flow in control. We offer a variety of payment terms and transparent fees, so you can find the right option for your business.
Part of Selectpay’s Invoice Finance service, we’ll pay you 85% of your invoice upfront and the remaining 15% when the invoice is fully paid by your client. Importantly, our Invoice financing solution does not have the layers of fees traditional IF solutions have such as line fees, monthly fees, and lock-in fees. With Selectpay, there’s only one small transparent fee for this service and you choose which invoice you wish to fund.
Get started today and see how invoice financing can help keep your balance sheet healthy.