Everything You Need to Know About Invoice Finance

what is invoice financeInvoice 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.

Invoice financing gives you a number of crucial advantages, the most important ones being:

  • Enhanced cash flow
  • Access to the sum within 24 hours of issuing an invoice
  • Retained control over debt collection
  • Invoice finance services are scalable, with the benefit from more cash as your company expands
  • You work with a team of finance professionals (in the case of factoring)
  • You gain a competitive edge that will be essential for growing your business

Watch The Factoring And Invoice Discounting Guide Below:

Invoice Factoring

As already mentioned, invoice factoring is one of the two options that you can select.

A dedicated professional will be helping you with collecting money from customers. What this means is that customers will be aware of the fact that you’re relying on the assistance of an invoice finance company.

The invoice financier will also handle running credit checks. As a result, you’ll get to work with clients capable of making payments. This professional may also be helpful for negotiating better business terms and conditions.

Choosing this service will free you from having to deal with late payments. Somebody else will be doing financial management, while you’ll be free to focus on strategic development and other pressing tasks at hand.

Invoice Discounting

In this instance, a rep of the invoice finance company isn’t managing debt collection for you. The company will simply handle lending money for all of your unpaid invoices. Thus, customers aren’t going to know that you’re working with invoice finance professionals.

The service is arranged confidentially. If you’re interested in maintaining and managing close relationships with your clients, this service is the right one for you.

Just like in the case of other B2B services, finding the right invoice finance partner is of uttermost importance. Check the terms and conditions and make sure that you’re getting quality customer support. These are essential for complete satisfaction with the service, accuracy and convenience.