Introduction to Invoice Finance by Andrew Darling

Cashflow is an important part of any growing business, especially in a recovering economy. Being able to access the money you’re owed can mean the difference between a stagnant and a prosperous business.

Maintaining cashflow within your company or organisation is one of the fine arts of business. Having the capital to be able to overcome challenges and bring about new opportunities is something which every business owner aspires to and this is where invoice finance can help.

Invoice Finance

If your business sells its services or products to other businesses, then invoice finance (factoring or invoice discounting) is a way to maintain a healthy cashflow.

It’s a form of funding that allows companies to release cash tied-up outstanding invoices, enabling businesses to access money quickly so they can continue to trade and grow without cashflow worries.

Factoring and Invoice Discounting

There are two types of invoice finance – factoring and invoice discounting. Both are similar processes, but offer different levels of control.

  • Factoring is where a third party invoice finance provider gives you a percentage of your unpaid business invoices and then collects the payment from your customer, so you don’t have to. When full payment is made the remaining money (minus a small fee) is paid back to your business
  • Invoice Discounting is a funding only service where the invoice finance provider gives you a percentage of your outstanding unpaid invoices, but unlike factoring you chase your customer for payment, maintaining those relationships

Both services provide cashflow for your business, but are tailored for each business’s needs. Bad Debt Protection can be added to both options to protect your business against customer insolvency or inability to pay.

The invoice finance process

With over 40,000 businesses currently utilising this type of support, it’s important to know how Invoice Finance can help your business. Read more about Invoice Finance here.

Bibby Financial Services

As the UK’s leading independent invoice finance specialist and a trusted provider of cashflow funding to over 7,000 businesses, Bibby Financial Services provides a range of finance solutions for businesses in over 300 industry sectors.

For more information about Bibby Financial Services’ cashflow solutions, visit: www.bibbyfinancialservices.com or call 0800 91 95 92.

About the Author

Having worked in financial services for over 36 years, Andrew Darling is a specialist in invoice discounting, factoring and trade finance solutions. He currently manages the development of business with higher turnover companies at Bibby Financial Services, specialising in corporate finance for businesses with turnover of £5 million or more.

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