What is Invoice Finance?
Cash flow is critically important to any business, and can be hampered by the length of time it takes between raising an invoice, and it being paid by the customer. Invoice Finance is a solution designed to mitigate this issue by releasing the cash tied up in business invoices almost immediately. There are a variety of ways in which this happens, but the key aspect is that service providers such as ourselves will quickly advance a percentage of your unpaid invoices.
How Does Invoice Finance Work?
Once an invoice has been raised, a copy is sent to us. We then advance your business up to 85% of the value of the invoice, and take a service fee (calculated based on the turnover of your business) from the remaining balance, which is held in reserve. Once the invoice has been paid in full back to us, we deduct a finance fee (calculated based on the total money lent), and return the remaining balance to you. There may be slight variations in this process depending on the product you choose.
Why Do Businesses Choose Invoice Finance?
There are many reasons that a business might want to strengthen its cash flow via this method, but the two most common are to help make funds available for growth, and to ensure funds are consistently available for monthly expenses such as payroll. Therefore, Invoice Finance is an ideal funding solution for small businesses (SMEs) that are looking to expand.
Growth can be difficult for SMEs who haven’t got large cash reserves. Whether you’re looking to hire new employees, update technology, or move to new premises, unpaid invoices can be a hindrance. Rather than waiting for them to be cleared, Invoice Finance provides the cash SMEs need for a small fee.
Industries such as the recruitment sector frequently have issues managing payroll. Employees are often paid each week, but with invoices often requiring payment within 30 or even 60 days, recruitment agencies often suffer from restricted cash flow. Products such as Payroll Finance help ensure that the cash is available almost as soon as the work is done.
There are several other benefits to be found. We can offer a facility whereby we collect and manage our client’s credit control, allowing their time to be freed up to focus on other important areas of their business. For more information about all of our products, please visit the products page.
What are the Different Types of Invoice Finance?
There are a variety of different products to choose from when it comes to releasing the cash tied up in invoices. A process that works for one business might not be suitable for another, so at Hitachi Capital Invoice Finance, we offer numerous solutions. The most commonly encountered types of funding we offer are Invoice Factoring and Invoice Discounting.
The primary difference between the two is that we manage the collection of debts when you choose Invoice Factoring, whereas the process remains confidential when you choose Invoice Discounting. Each option has benefits, and it’s important to research these fully before making a decision. You can find further information in our Knowledge Centre.
Who is Invoice Finance For?
Invoice Finance is just as common for both SMEs and larger businesses, and many companies can take advantage of this funding method. We provide Invoice Finance solutions to a wide range of businesses from a variety of sectors such as recruitment, transport, logistics, manufacturing and many more.
For a casual discussion please speak to one of our friendly advisors on 0808 274 5092.
Speak to one of our UK advisors today on
0808 120 9866
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For an informal discussion in regards to your cash flow needs please contact us on
0808 256 6442