About Invoice Finance
If you are a business that is regularly invoicing customers and have payment terms with your customers that are greater than 30 days, Invoice Finance may be right for you. Invoice Finance releases cash to your business on the same day as the invoice is issued. This is a fantastic way for you to improve your cash flow. There are two main types:
Invoice Factoring:
- The credit control is provided by the lender. Your invoices are issued and monies collected by the lender
Invoice Discounting:
- The Lender provides the funding to you, you issue the invoices to your customers and follow up on payments directly. This is also known as Confidential Invoice Discounting facility, as your customer would not know that you have the backing of a lender behind you.
How does it work:
- Lenders usually provide funds for 60 or 90 or 120 days to help you collect your debt from your clients. The usual drawdown is approximately 80-85% of an invoice minus the Lender’s arrangement fee. If you invoice your client on the 1st June at 9am, you can log on to the Lender’s online system at 9.15am and draw down your funds immediately. These funds would be in the region of 80-85% of your invoice value minus an arrangement fee. You then have 60, 90 or 120 days to collect your outstanding dues from your clients. This allows you to meet payroll, pay suppliers and meet other cash flow requirements.
If you chose Bad Debt Protection, then terms offered are often better. This is an insurance to protect you against any of your customers becoming insolvent. It is optional.
If you would like a Decimal Factor Funding Specialist to contact you regarding Invoice Finance, please email us at info@decimalfactor.com