Invoice finance, for those who don’t know, is a means that allows businesses especially the small ones to sell their invoices and get paid immediately instead of having to wait for the 15 to 120-day period as it’s the traditional time taken by clients to make a payment.
This is incredibly important as it will allow your business to have a much more fluid cash flow that you can definitely inject right back into your business. But this is just one the many reasons why you should employ invoice finance and they are all listed below:
You’ll Be Spared from Acquiring Fresh Debt
One of the hardest things you’ll ever get to encounter especially as a proprietor of a small business is having to duck accruing debt. This is mainly because of two things, a lot of expenditure that comes in the form of trying to expand and secondly, having little liquid cash. Unfortunately, most small business owner ends up running aground simply because they lack the finances to bail themselves out.
Others simply drown in so much debt to the point of being declared bankrupt. But thanks to the selective invoice finance, you will only be in a position to borrow money that you’ve already earned, which isn’t a debt per se. and since it isn’t debt, you won’t even have to worry about increasing any liabilities in your business.
Allows You to Buy More Inventory
As earlier stated, most small businesses crash and burn simply because they lack the financial resources to add more assets to their inventory. Thankfully, securing a cool invoice finance boost will take care of this without your having to wait for too darn long. And once you’ve sorted everything out, you are likely to have a good turnover which will almost always translate to a good turnover.
Invoice Finance Comes with No Long Term Commitments Attached
This is yet another incredible reason why you should focus more on invoice finance, unlike the traditional factoring. Instead of handing off your ledger and having to wait close to four months (or sometimes even five) to get your invoice funded, you’ll get yourself sorted out in a matter of hours or day at most.
And the most beautiful thing about this is that you won’t have to sign any long term contracts or have any long term obligations whatsoever. Instead, you will only get the chance to pay for the invoices that you finance and only use it when you need it and that’s it.
The Fees Are Pretty Much Low
Another reason for you to try invoice financing is that the fees, or interest rates if you will, are quite low compared to bank loans. And on top of the 1.5-2.5% interest on every invoice financed, you won’t have to incur any hidden charges like its usually the case with most banks or bodies that offer lines of credits to businesses.
In other words, you’ll have yourself covered within the short-term. And thanks to this fact, you will not have to worry about how you are going to make the payments and would, therefore, use that time to make your business successful. This is exactly why you’ll need to find a good invoice financer and get to read the terms before getting involved with them.
It’s Much Faster Than Traditional Financing
It goes without saying that traditional financing can, as a matter of fact, be a pain in the backside, especially for your small business. Besides taking months before its approved, it is very important for you to note that the chances of your request being approved are 50-50.
But with invoice financing, you’ll only get to wait from a few hours to two days to get your answer, which is mostly an approval. And since time is money especially in today’s world where business is cutthroat, you will appreciate invoice financing and what it’ll do for you and your small business.
The number one goal for every small business, including yours, is to not only break even but make profits. And one way of doing this is by using finance hacks such as invoice financing that will, in turn, allow you and your business for that matter) to get ahead of the curve without having to strain that much.
All you need to do is to be as responsible as you can with the money so that you can inject it back into your business as strategically as possible. The last thing you want to do is waste the money on a business strategy that hasn’t really been worked on at all. And that’s why you need to seek professional help if you don’t have any. In short, your business strategy has to be a good one if at all your invoice financing is to help you grow.