What is invoice financing, and how can it help you?

It’s important to make sure that you have enough funds to keep your company running efficiently on a day-to-day basis. However, unpaid invoices can often hinder your business and growth plans by not providing you with the needed finances to deal with unexpected costs or shocks. Luckily, invoice financing can be a great option to prevent this from happening.

What is invoice financing?

You create invoices when your company sells a good or service to a customer. Often, invoices owed are paid from anywhere between 30 to 90 days, but this can lead to problems when other expenses arise, like when you need to restock your products or when employees ask for a wage advance.

Invoice financing provides a solution to these hassles by unlocking the money from unpaid invoices that would otherwise be tied up. You can then use these funds to deal with sudden expenses that arise and keep your business running smoothly, especially during financial emergencies!

Here's how invoice financing works:

1. Your business generates an invoice. This happens when you sell a good or service to a customer!

2. Although the process may differ slightly between different institutions, you will generally submit copies of these invoices, as well as some basic information and documents about your company.

3. Your invoice is assessed, and you will be contacted about how much money you can receive and the fee, which is usually a set percentage of the invoice amount. Companies like Zetl offer this without any long term contracts or commitments!

4. Once you agree to an amount, the money will be sent to your business bank account.

5. After receiving payment for the invoice from your client, the rest of the invoice amount will be forwarded to you minus any service fees. It’s as simple as that!

What are the benefits of invoice financing?

Improve cash flow
One of the most obvious benefits of invoice finance is how it can improve your business’ cash flow. By releasing the funds tied up from unpaid invoices, you can put money towards expenses and opportunities that allow your business to run smoothly and grow.

Fast access to cash
Invoice financing is a faster and more efficient alternative to the traditional financing services offered by institutions like banks. With invoice financing, there are less formalities involved: you can submit your paperwork online from the comfort of your own home, with funds arriving in your bank account in as little as under 24 hours. This is a particularly good option if you are facing a tight deadline or unexpected expenses.

Flexible finance
You may not want to take out a long term fixed term loan from the bank, often with personal guarantees required and monthly interest payments. Invoice financing usually doesn’t involve any long term commitment and gives you the flexibility to use it as required.

Only make repayments when you receive your invoice
This means that you don’t need to worry about repaying your invoices until the original invoice has been paid in full by your client. No monthly interest payments or fixed term repayments are necessary, which strengthens your business’ cash flow. The only fees involved are the service fees involved in invoice financing.

Invoice financing (non-notified) is private
Sometimes you may need cash to deal with unexpected circumstances that you do not necessarily want your clients knowing about. Invoice financing can be a completely discreet option that offers this privacy: your clients don’t need to know that their invoice was funded.