Monday 29th Oct 2018
What Are the Rates of Invoice Discounting?
Even in 2018, printing isn’t dead. In fact, there’s still plenty of opportunity in the market, particularly when it comes to large format printing, which includes things like displays, exhibition signage and more. Whether it’s paper or vinyl, there’s still a considerable demand for such services.
If you’re thinking about entering the market with your own business, then there’s little doubt that funding and financing will be amongst your biggest concerns. Unlike many modern start-ups, a printing business requires considerable investment to get started. It’s not something that can be run remotely, and it’s not something that can be done in a small rented room either - especially if you’re creating the large format items. This means renting or buying reasonably sized premises. And then, you need your equipment and machinery.
So how can you go about funding all of this?
In the beginning, you’ve got a variety of options to get you off the ground. Most business owners will of course use their own saved funds as far as possible, but it’s rare that this covers everything. Business loans are available from all the traditional lenders, which can be both secured and unsecured, and rates can be reasonable. Crowdfunding is a sound option these days, and it’s not just for trendy new products - there are many services available to help connect you and your business plan with potential investors. And if you’d rather not have many investors, then there are also services to find one or two. It’s always best to work out which will cost you the least in the long run, taking into account things like early settlement fees, or shares that you might need to give up.
When it comes to the equipment itself, a bank loan might seem like the most obvious choice, but leasing and other similar products are often a better choice. Often provided by the equipment retailer, they allow you to spread out the cost and either avoid the depreciation hit, or allow you to own the equipment at the end of the contract if you’d prefer the asset. There are pros and cons to the different options, especially when it comes to tax, so make sure you do your research.
Up and Running
Once you’re up and running, there are a few other options that you can pursue that might make expansion easier. One of the main issues that established businesses run into is their cash flow. This can be a real barrier to expansion, and in worst case scenarios, it can mean difficulties in meeting monthly obligations. There are a variety of cash flow finance products, but invoice finance is perhaps the most widely used. This is generally seen as one of the more non-traditional types of finance, but it is nonetheless popular and fairly straightforward to understand. Essentially, you’re borrowing against the value of your invoices, and in principle this means that, for a small fee, you get almost all of the value of any invoice your raise, immediately. Rather than waiting for up to 30 days, 60 days or even longer, the money is there instantly to be used as necessary. This makes expansion and general business flexibility much more straightforward.
It should also be noted that certain types of invoice finance could be of real benefit to those companies that have recently become established, because products are available that mean the finance provider looks after credit control. This means that you won’t need to waste time chasing invoices yourself, or you won’t need to employ someone to do it for you.
All of the previously mentioned types of finance are also potentially useful for established businesses. If you need to finance a new expansion, whether premises or equipment, you can always consider outside investment, loans, or even overdrafts, which can be fairly flexible if you choose the right product. And again, if you need new equipment, whether as part of an expansion, or technological advancement, then always look into leasing and hire purchase.