Every small business owner struggles with managing cash flow. One of the most significant issues is the gap between what you earn and what you need to spend. Businesses can find themselves in an endless struggle just to keep up with day to day expenses. Invoice payments that take weeks or months to be settled only worsen the situation. Solutions that support gap financing between invoicing and payment receipt, such as small business invoice finance, can significantly aid cash flow issues.

We help small businesses unlock their cash flow with invoice finance and propel their growth. In this blog post, we will delve into the details of small business invoice finance, how it operates, and why it should be considered as a financing option by firms intending to grow.

What is Small Business Invoice Finance?

In an essence, Small business invoice finance unlocks cash for your business which is otherwise tied up and inaccessible due to unpaid invoices. It makes life easier for small businesses that have cash flow constraints, by selling their invoices to a financing company for immediate payment (which is usually a fraction of the invoice amount). This enables businesses to have quicker access to funds without having to wait for payments from their customers.

There are two main types of invoice refinance:

1. Factoring: This is a case where a business sells its invoice to a lender and the lender takes on the responsibility of collecting payment from the customers. This suits businesses that would like to hand over their credit control and collection to a third party.
2. Invoice Discounting: This works in a slightly different way, collection of payments is still done by the business but everything else is handled by the lender. The funds are given in advance by the loaner and everything else becomes the responsibility of the business.

Both options help businesses maintain a healthy cash flow while awaiting payments from customers.

How Does Small Business Invoice Finance Work? 

Financing an invoice for a small business involves a few uncomplicated steps. Here’s how it generally works:

1. Submission of the Invoice

The business sends its unpaid invoices to the invoice finance provider. These invoices must correspond to good paying customers, as the lender will look into their risk assessment before advancing any funds.

2. Payment in Advance

After confirming the invoices, the finance provider makes an advance payment, which ranges between 70-90% of the invoice value. That means the business has cash readily available immediately instead of idle waiting for the payment terms to be completed.

3. Payment from Customers

The customer pays the invoice to the finance provider directly in the case of factoring, or to the business in case of invoice discounting.

4. Payment Finalization

The lender pays out the rest of that invoice after the customer pays the invoice and keeps minus a small portion for their payment.

Small businesses use invoice finance to improve cash flow, cover operating expenses like payroll or supplier payments, and mitigate the risk of impending insolvency. Sufficient funding helps businesses avoid falling behind in the cash flow cycle and missing valuable opportunities.

How Small Business Invoice Finance Helps 

Small business owners reap loads of benefits from invoice finance, but small businesses in particular get the greatest perks. For this reason, it is of utmost importance to know the following:

1. Enhanced Cash Flow Optimization

Invoice finance provides immediate payment for the issued invoices, and is effective in closing the gap between payments, resulting in sustained cash flow improvement. In addition to that, it enables timely payment to customers, investment in growth opportunities, and elevation of day-to-day operational activities without having to depend on receiving payments from customers.

2. No Collateral Assets Required

While small business invoice finance does not require such an extensive collateral as integrating assets, traditional loans do. This allows small businesses to reap the advantages and acquire quick cash against unpaid invoices without having property, inventory, or other assets tied up.

3. Flexible Funding

Invoice financing is offering businesses the flexibility they need. Since funding is only available based on the client’s outstanding invoices, the business’s available funding increases as it grows? This scalability features makes it an ideal candidate for businesses that experience fluctuating cash flow needs.

4. Outsourced Credit Control

A business that opts for factoring can also make use of outsourced credit control. The financial service provider looks after collecting and managing the payment processes, enabling the business to concentrate on its key activities.

5. Support for Growth

By providing businesses with funds to invest in new opportunities, expand operations, or even increase the inventory, invoice finance helps businesses grow. The immediacy with which funds can be accessed aids small businesses in taking advantage of growth opportunities without the waiting time required in traditional funding sources.

What’s Best About Using Simply Factoring Brokers to Arrange Invoice Financing for Small Businesses?

Here at Simply Factoring Brokers, it is our goal to provide small businesses with custom tailored solutions specifically designed to address their invoice financing concerns. This is why we stand out as the best partner for small businesses:

1. Comprehensive Assistance

Our professionals will assist you with any step of the process including picking out the most suitable small business invoice finance options for you. We will make sure to explain all the features available such as factoring and invoice discounting so that you are able to choose the best for your cash flow situation.

2. Tailor Made Approaches

We provide a wide range of tailored invoice finance solutions because we know that all businesses have different requirements. By taking the time to understand your business model and your customers, we ensure that your specific financial needs are addressed in the best way possible.

3. Reliable and Responsive Service

Simply Factoring Brokers understand that time is a resource, therefore, there is no wasting it during the application processes. Our streamlined processes allow for easy and quick cash unlocking. We ensure our clients lose no time accessing cash from their outstanding invoices.

4. Access to Many Lenders

We, as independent brokers, have specialists and lenders. We are able to access various networks. Therefore, we can obtain the perfect offer for your business; even if the credit history is not appealing.

5. Transparent with Terms

We as a company prioritize helping your business without any concealed costs. You can trust us in the sense that the terms which we provide to you will be straightforward and transparent.

Conclusion

Small companies use invoice financing as a method to reduce cash flow issues, lower stress levels, and enable seizing growth chances. Unlocking the cash from unpaid invoices gives businesses the upper hand in managing their expenses.

We help small and mid-sized businesses locate financing solutions that help them achieve their goals. Our company helps with discounting invoices and factoring, and we will help you find the most suitable companies and lenders in the market.

If your small business is having difficulties with cash flow, small business invoice finance may be the answer to your problem. Visit Simply Factoring Brokers today and start factoring your invoices so they can advance you cash, which is the first step towards financial growth.