Invoice finance plays an important role in the growth and expansion of a business. What exactly is it and who needs to hire invoice finance companies? Keep on reading to find out.
Invoice finance refers to having another company buy all of your unpaid invoices. As the service recipient, you can choose among two distinct service categories – invoice factoring and invoice discounting.
Depending on the partner that you choose, the company advance anywhere between 80 and 90 percent of the value of unpaid invoices. This way, your business gets cash flow by processing outstanding invoices in a quick and efficient way.
The process is usually quite simple. You generate an invoice and send it to a customer. The invoice finance company will make an advance payment, usually within 24 hours of the invoice being issued. Once the customer payment is received, you’ll get back the remaining percentage. The invoice finance fee is usually taken out of the invoice payment.