Why SMEs Should Consider Invoice Finance

An immediate injection of cash has the potential to save your SME business. Every SME, short for small and medium-sized business, needs prompt access to the lifeline of liquidity.

Using invoice finance allows you to unlock the funds held in your sales ledger immediately, without the need to wait for 30, 60 or 90 day payment terms to be met.

Consider the benefits of invoice financing for SMEs as detailed below.

Invoice financing is a financial lifeline

As a small/medium-sized business owner, your clients mean the world to you.

Losing even one large client has the potential to lead to tight cashflow.

Enter invoice financing for SMEs.

Tap into the liquidity available through invoice financing and you’ll have the cash necessary to advertise, invest in new equipment, hire new employees and more.

Though invoice financing is also beneficial to large businesses, it doesn’t have nearly the impact. Small and medium-sized companies find such invoicing much more impactful.

Let’s face facts: Small businesses have limited credit access, a comparably small client base and fewer marketing budget.

Take the invoice financing route and you’ll have an influx of cash for marketing, sales campaigns, additional inventory and more.

Invoice financing does have the potential to be the difference-maker between keeping your doors open and closing them for good.

Spanning the gap with invoice financing

It is no secret that some clients are slow to pay. Others refuse to pay altogether.

Invoice financing bridges the gap between the point in time when a sale is complete and the time when the client pays.

This creative form of financing ultimately provides business-saving cash flow. The cash infusion empowers the business to fulfil additional orders, expand operations and prevail amidst supply chain snags.

Grow even when clients are slow to pay

Chances are, some of your clients aren’t paying as promised. Even if most are paying in full and on time, that situation is bound to change.

Moreover, if the economy sours, you’ll find more accounts receivable go unsatisfied.

Obtain a percentage of money owed on outstanding invoices with the invoice finance approach, and you’ll have the “dry powder” necessary to expand operations.

Most small to medium-sized businesses don’t have a balance sheet that compares to large corporations.

The role of invoice factoring is to empower small and medium-sized businesses to expand operations and market share, even with low revenue.

What matters most is that debtors owe money to the business. As long as a customer owes you money, you set the stage for creative invoice financing.

The invoice factoring provider absorbs the risk of potential underpayment or non-payment, paying your business a percentage of the money owed. As long as you have outstanding accounts receivable or increasing sales, you’ll enjoy a steady flow of cash.

Invoice factoring and discounting for SMEs

Every SME owner and manager should be aware that invoice discounting is not the same as invoice factoring.

Debt factoring involves a financier paying a significant percentage of the unpaid invoices. The lender is then responsible for collecting payment.

The invoice factoring approach liberates you to centre your focus on your company. The financier invests its time and resources seeking payment. Though clients are aware that you have outsourced accounts receivable to a third party, it won’t hurt business relations.

In contrast, some SMEs choose invoice discounting. This approach involves a lender advancing most of the unpaid invoices’ value. It is then your responsibility as business to handle credit control.

The SME owner uses the proceeds to repay the lender.

What matters most is that you received the money owed to your business from the lender for prompt business growth.

Get invoice finance from ABC Finance now

If you’re looking to get the best deal on your invoice finance facility, use our online comparison tool and have the market’s leading lenders compete for your business.

Simply input your details, sit back and wait for the offers to roll in through the platform, without the need for endless sales calls.

Once you have the perfect offer for you, progress your application in a single click. It couldn’t be easier.