If you are a company that has just had a business loan application rejected, you don’t need telling what a bitter blow this can be, and what headaches follow. Ultimately, this could mean that the company can not invest, or cover expenses such as bills, assets etc. Small businesses in particular are really struggling as many are not receiving the money for invoices they have sent out within the stated time, and thus don’t have the funds to pay their own.
The two best known financial products that can be used to improve the cash flow situation within a business are lines of credit and conventional business loans. Whilst these are the most common they are not, however, always the best solution. If the financial dilemma of your company is that you simply can’t wait 30-45 days for your invoices to be paid, you should take a serious look at invoice financing.
There is little deviation in the way that most commercial transactions are carried out; a service or product is provided, along with an invoice for payment. The client then has anywhere between 30-60 days to settle their invoice, depending on the terms of your company. Most companies have no alternative to offering payment terms because large companies demand it, and if you refuse they will go elsewhere, simple as that.
This is one of the costs of doing business with important clients, but waiting for the money to come in has caused many nightmares for both companies and their accountancy service. By engaging the services of an invoice financing company, such as Touch Financial, you can get the money instantly from your outstanding invoices and not have to wait for the money to hit the company bank account to pay your own bills.
This is an area of business financing that has been increasing greatly in popularity recently, and many small businesses have said that without invoice financing they would have had to stop trading as the simply couldn’t afford to wait for invoice to be paid. The fact that they have 80-90% of the value of their invoices instantly gives them the cash to pay their own bills and secure the discounts often offered for instant payments.
The critical difference between invoice financing and the likes of loans is that they check out the credit rating of the company who owns the money, not the receiver. This is how they determine which invoices they will pay out on, and which they won’t. This is a much fairer system all around as you may have been declined a loan on the basis you have made numerous late payments yourself, purely due to having to wait for invoices to be paid.
Featured article for Touch Financial,