FAQ: A Business Owner’s Guide to Working Capital
Every business experiences multiple setbacks on its way to success. How one navigates those low points financially determines the pace at which the company grows
Late invoices are a common pet peeve for small business owners. Many small and medium enterprises provide goods and services on credit. However, due to various reasons, their customers are not always timely when it comes to clearing these invoices. Late invoices can cause cash flow issues for firms, making it difficult for them to pay for crucial business expenses. Delayed customer payments can also give rise to administrative hassles as the business owner must spend time and resources to chase those payments. If you are a business owner struggling with this problem, invoice finance may be the perfect solution for you! Let’s understand what it means and how you can use it to deal with delayed payments.
A delay in payment from a large account can cause significant cash flow problems for your business. You can try the following solutions to recoup your money and safeguard your firm:
Invoice finance represents a credit facility where businesses can borrow money against uncleared invoices. Once a business raises an invoice for goods or services delivered to customers, it can use invoice financing to access funds. This popular financing instrument allows business owners to deal with the issue of late invoices and delayed payments.
In invoice financing, a lender approves a monetary limit for the borrower against their unpaid invoices. As a result, the firm may be able to access up to 95% of the value of these late invoices. Once the firm’s customers pay for these invoices, the lender can recoup the money they lent. The business pays interest on the amount they withdraw under the approved limit.
Invoice financing, also known as receivables financing, has two broad categories. Let’s break down these two types:
If these options sound interesting, you can contact the Broc Finance team to find out more. Talk to them about your invoice financing needs to determine an optimal solution today!
Saroj is the Head of Lending at Broc Finance. He comes with 13+ years of experience in small business lending and has a knack of structuring complex deals and get the best outcome for his customers.
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