More and more business are waking up to the advantages of invoice finance and beginning to use invoice discounting and invoice factoring to reduce time and resources spent on collecting money. Figures released by The Asset Based Finance Association (ABFA), show a considerable increase in the use of both invoice discounting and invoice factoring by UK businesses over the period of March 2010 to March 2011, with a growth increase of 15% and 7% respectively.
Invoice discounting and invoice factoring both allow you to draw funds against money owed to your business, usually in the form of sales invoices. In other words, if you have immediate bills or salaries to pay and confirmed invoices that are not due for payment for a few month’s time, to raise capital you can either: take out a business loan secured against your outstanding invoices (discounting); or sell your business’ invoices to a third-party known as a Factor (factoring).
Both methods allow a business to immediately increase its cash flow, which can help with a variety of business transactions including managing debt reduction, speeding up payment of suppliers and even improving credit rating. For a more detailed explanation and information on the invoice finance companies available to you as a small business, take a look at the Invoice discounting and Invoice factoring sections of our website today.