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When is the best time to think about Invoice Discounting?

Published on 2nd October 2017 - Last update on 17th March 2020

Does your business use invoices to trade on credit with other businesses? If you have invoices that are overdue, or if repayments are due in the distant future, you could be sitting on a potential funding pot without even knowing it. If you’ve got cash tied up in unpaid invoices, a business finance product that could connect you with up to 90% of the value of these vital funds is Invoice Discounting. An increasingly popular method of finance among the SME community, it’s a useful tool that could be used to aid cash flow, resolve negative working capital, settle debts or even grow parts of your business. In this blog, we’ll taking a closer look at Invoice Discounting and assess when it can prove beneficial to your business.

When should I apply for Invoice Discounting?

Many businesses operating in a wide range of UK sectors use invoices to trade on credit with other businesses, including suppliers, farms, construction firms to electricians. Although invoices are designed to enable customers to delay payment until an agreed date, it can deprive businesses of vital funds in the meantime. The issue only gets worse if payments subsequently arrive late, creating all manner of problems including poor cash flow, negative working capital and slow growth. So, if you need access to cash tied up in invoices worth over £5,000 before an arranged date, or to cope with late payments, applying for an Invoice Discounting agreement sooner rather than later is certainly a smart business decision.

If your business possesses invoices in excess of £5,000 and you need the funds now, why not apply for Invoice Finance today, or visit us to see how your business could benefit?

What do I need to apply?

To apply, your business must possess invoices that are valued at a minimum of £5,000. Lenders will also require you to demonstrate that your business is reasonably profitable and possesses a sufficient annual turnover. Although this type of finance product is secured, you aren’t required to offer physical assets as collateral against it since security is acquired through your customer’s payments, or receivables. This helps to make this form of business finance very much open to the UK’s SME community. In addition, lenders tend to take a flexible approach to an applicant’s credit profile. So, if you’ve got a poor credit score or a less than desirable business history, it usually won’t affect decisions on whether or not to lend.

However, it’s worth noting that some lenders may ask for additional security, using physical assets such your home, or request a Personal Guarantee. If you aren’t willing, or are unable, to offer any these, there are plenty of other lenders willing to offer your business an advance.

Considering Invoice Discounting for your business?

Choosing the most appropriate and affordable business finance product for your particular business can be daunting. However, if you’ve got invoices worth £5,000 or more, Invoice Discounting could be what your business needs. By applying for Invoice Discounting, you’re able to recoup the cash you’re owed and quickly put it to use in your business. Whether it’s to help your cash flow, clear debts or fund business projects, help is at hand. If you’re concerned about mounting unpaid invoices and need cash right away to bridge the shortfall, see how Invoice Finance can help your business.

Acquire the cash that’s owed to your business, apply for Invoice Finance… today.

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David Harrison

David Harrison

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