Those who run a business on day to day basis really understand the important of continued cash flow. This is the main oxygen for the business.
With banks tightening their policies, the business owners are now turning to other options, like invoice financing, when it comes to generating cash flow.
So, here are some reasons why you should opt for this finance option:
Invoice financing is accessible. Unlike in case of traditional funding options, in this method lesser emphasis is given on the historic financial performance of the company. Also, less emphasis is given to the strength of the balance sheet by the funder while considering the application.
This is a flexible form of business finance. This option is sales linked. This implies that as your business grows; the funding available also increases with it. The funder usually advances up to 90% of the outstanding invoices in order to create more sales and issue more number of invoices. As your receivable increase, the availability of working capital also increases.
This priiess lets you generate money faster. Applying for bank loans is time taking. This is a faster method owing to minimum amount of paper work. You can access cash from the pending receivable immediately. Also, the day you submit the invoice, you get the money.
There is no question of additional debt in this process. The funds which are issued to the company are not in form of loan. Neither is it debt. It is your own money which you are getting before the normal time. Also, there is no additional dent liability attached to the business balance sheet.
This process is highly cost effective. This arrangement is quite similar to getting paid on cash on delivery. Compared to traditional options like credit lines, bank loans and liquidating assets for payment, costs of financing the invoice is minimal.
Peace of mind
You can peace of mind in this process. There will be no obligations and debts which are to be paid. So, rather than worrying about the cash flow, the savvy business owners are able to put emphasis on growing sales and customer services.
With this arrangement, your company will be in a better position to accept new jobs and contracts without worrying about where the money will be coming from. The availability of excess working capital will change according to the way you go after the new contracts. You may also enhance your sales by giving more tempting payment terms to your customers. More customers implies a greater waiting time before you are paid on charged sales. However, with this process, you can have greater control and access over your cash.