How Your Company Can Benefit From Invoice Finance Options

March 7, 2023

In business, cash is king. It allows you to pay suppliers to fulfill orders, compensate your employees, and ensure all your bills are current. However, sometimes cash flow can slow down, and that can create problems, especially if you receive a large order.

Rather than bypassing a great sale, many companies turn to invoice finance providers. These third-party brokers allow you to keep your business running, even when your cash is tied up in other assets. This guide will explain how invoice financing works and how your business can benefit from using it.

The basics behind invoice finance services.

If you run a business that sells a particular good, then you likely have a network of suppliers that you source your materials. In typical business dealings, you already have the funds needed to purchase those supplies, assemble your goods, supply them to your customer, and receive payment. However, what happens if you get an order so large that you can’t afford your materials or if your cash is tied up when an order comes in?

Some business owners assume they can’t fulfill the order, and they lose out on a great paycheck. Others, though, know that invoice finance services can help. With this arrangement, you work with a third-party finance company to get the necessary supplies and complete the sale. The process looks like this:

  1. You receive an order where you don’t have the cash to source the supplies. Rather than turning the order down, you resort to an invoice finance service.
  2. You provide the financier with the invoice for the customer, so they understand the amount you are owed. Using that dollar amount, they loan you a lump sum of cash and keep a percentage of the total as collateral.
  3. You then use those funds to fulfill the order, and the customer makes the invoice payment at maturity.
  4. Once you receive those funds, the financier remits the balance back to you minus their fees.

This system ensures you never have to turn down an order no matter your cash flow, and all you have to do is pay a small percentage to the invoice finance provider.

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Benefits of invoice finance services.

Avoid taking out high-interest loans.

When companies need an influx of cash, they often turn to a business loan. While this can supply them with the necessary funding, it usually comes with caveats. You could have to pay high-interest rates on your loan, and you might not even qualify depending on the business’ credit score. Invoice loans don’t have either of these problems. Since it’s based on an existing invoice, your credit typically doesn’t matter, and you only have to pay one small fee to receive funding.

Protect your reputation.

Being unable to fulfill an order can impact your company’s reputation. It can make it seem like you aren’t a reliable provider, which can cost you business in the future. With invoice financing, you won’t have to turn down any business, so your reputation won’t take a hit.

Get access to cash quickly.

Another benefit of this type of financing is how quickly you’ll receive funding. Unlike taking out a loan, which can become a long and drawn-out process, invoice loans are fast and easy. You’ll never have to worry about missing out on a deal due to a mountain of paperwork.

Take advantage of invoice financing today.

BP Financing makes it easy to access the cash you’re owed. We have 15 years of experience and take a positive and proactive approach to everyone who uses our services. When you partner with us, you can have confidence knowing you’ll have the financing you need when it matters most. Learn more about our services, or get in touch to get started today.