At Capital Place we have helped our clients to secure financial needs of their business activities by introducing them to Invoice Finance. It is a type of revolving credit facility that allows you to manage your cash flow. It is ideal for businesses that have customers on long payment terms, or who often pay late. Our clients often decide to use this funds to take on new projects without taking on extra debt. We usually advise on taking Invoice Discounting, however those of our clients who have expanded their fleet tend to decide on Invoice Factoring. The main reason is with Invoice Factoring you benefit from funding and credit control while with Invoice Discounting you are responsible for credit control, benefiting from the funding only.
How it works
Invoice Finance transactions are structured so that your company receives funds in two installment payments. You submit your invoices to the facility provider, who then transfers the funds on the day of submission.
The first installment covers about 80% of the value of your invoices and is deposited to your account within one business day of requesting the funds.
Your company gets the remaining 20%, less the finance fee, once the customer pays the invoice in full.
Invoices are usually verified before funding. Verification allows the factor to determine that the invoice is due and that there are no issues that could prevent its payment (e.g., disputes, chargebacks, etc.).
Invoice financing is more flexible than business loans or overdrafts
The funding grows in-line with the company’s turnover
Decisions to lend against
invoices can often be made faster
Typically, you get a greater level of borrowing against the assets