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SME guide to invoice financing

  • Invoice financing is a flexible funding-only solution which releases cash tied up in outstanding customer invoices. 
  • Businesses can bridge the cashflow gap between raising an invoice and getting paid. Cash can be accessed as soon as you invoice a customer making financial planning more predictable. 
  • Invoice financing is perfect for fast-growing firms lacking the capital resources and cashflow to fund expansion plans, as well as start-up businesses, larger businesses looking to fund major transactions and those businesses that have cashflow difficulties or who have been the victim of late payment. 
  • Businesses can boost cashflow by receiving an immediate cash-injection and ongoing supply of working capital into their business against the value of their outstanding invoices.
  • Invoice discounting facilities are more responsive and are more flexible than bank loans and overdrafts. 
  • Invoice financing is a secure form of funding as the sales ledger is used to secure access to cash, so as a business grows so does the amount of funds that can be made available. 
  • Invoice financing facilities reduce the time and resource spent on credit management and collections for businesses. 
  • Invoice financing improves cash flow, resulting in better supplier terms and more funds available for business growth activities. 
  • Many providers offer bad debt protection, mitigating the impact of bad debt caused by the inability of a customer to pay. 
  • An extensive credit history is not required in the UK as the sales ledger of the business is used to secure its access to funds. This means those businesses which may have been turned down for bank funding have a viable and trusted funding option.

 Edward Rimmer is the UK chief executive for Bibby Financial Services

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