Invoice factoring is a form of invoice financing that allow you to get the cash flow boost you need and unlock the value in unpaid invoices. So, what is invoice factoring? With invoice factoring, you sell your unpaid invoice to an outside company who then take over the responsibility of chasing up payment. Invoice factoring could be the right option for you if you don’t mind your client knowing you’ve worked with a third-party, don’t have the time or resources to pursue payment yourself, have been waiting too long for your invoice to be paid or don’t think the client will be using your services or products again.
Which option should I choose?
If you have a great relationship with your client, the invoice isn’t overdue but you do need to obtain capital quickly, don’t want them to know you’re using a financier and have the time to seek out payment yourself, you may wish to opt for invoice discounting. You may have to pay slightly less for discounting, but this is because you’ll get all the benefits of an outsourced collections department if you opt for invoice factoring. You should make your choice after considering your circumstances and relationship with your client carefully.
Improve your cash flow
There are many high-quality invoice finance companies that can help you if you do wish to take advantage of invoice financing or discounting. Whatever you choose, you’ll normally get to keep around 85-90% of the money owed to once the financier has taken their cut. More and more companies are generating money to boost their cash flow via invoice financing. Unlocking the value in your invoices can mean taking advantage of great investment opportunities that won’t wait forever, settling your own debts and keeping your business moving in the right direction.