If you have to wait 30, 60 or even 90 days for your invoices to be paid but have the likes of staffing and material costs to pay out in the meantime, cash flow is probably not your friend. Over two thirds of businesses suffer some form of cash flow problem throughout their existence, whilst managing it is usually listed within the top 5 mistakes any small business can make.
Most of you will no doubt have heard of ‘invoicing financing’ but probably dismissed it out of hand due to the potential high costs or simply because you thought your business wasn’t quite big enough to warrant it. Both may well have been true historically but with funding choices here in the UK seeing a major advance over recent years perhaps now’s a good time to revisit a few key options:
Invoice Factoring (IF)
Invoice Factoring can provide up to 90% of the value of your outstanding invoices as cash. In turn, the lender would take control of your sales ledger, chasing your customers for payment thus helping to manage the credit control of your business.
This option can see cash being paid into your bank account inside 24 hours (no more waiting 30 – 90 days) which in turn gives you a hugely flexible cash flow, gives you the potential to offer increased credit terms to your larger clients and generally gives you the ability to grow at a faster pace.
If you’re trading business to business, offer goods or services on credit and have a turnover in excess of £50k there are lenders out there who will be more than willing to help.
Selective Single Invoice Discounting (SSID)
Also known as Spot Factoring, SSID can provide up to 85% of the value of an outstanding invoice as cash. Unlike standard Invoice Factoring, you can essentially cherry pick which invoices you want to finance, with the lender leaving you to manage the remainder of your invoices as you usually would.
This option has been devised especially for small businesses to help fund their growth, coming with an easy to understand flat fee structure.
Confidential Invoice Discounting (CID)
Confidential Invoice Discounting can provide up to 90% of the value of your outstanding invoices as cash. The main benefit here as opposed to traditional IF or SSID is that you maintain full control over your customers and sales ledger without the need for the lender to get involved.
Here at Platform Accounting we now have the right partners to help meet your invoice financing needs so please get in touch to see what options are available to you.