Having large amounts of cash tied up with your debtors can significantly hinder your business growth. Invoice factoring is a great solution for unlocking the cash tied up in your unpaid invoices. Typically, around 95% of the cash can be released to you instantly, in some cases even 100% of the funds are made available.
There are two main types of invoice finance- invoice factoring and invoice discounting. Invoice factoring is sometimes referred to as ‘factoring’, or ‘debt factoring’. It enables you to sell unpaid invoices (accounts receivable) to a third-party factoring company (a factor).
The factoring company buys the invoices for a percentage of their total value and then takes responsibility for collecting the invoice payments.
As an alternative to bank loans, overdrafts, or credit cards, it can bridge the gap between raising customer invoices and getting paid. At the same time, it can free up your time because the funder manages your invoicing and collection processes for you.