Funding Solutions For Business in Kent

In the first of our series ‘Dispelling the myths of Invoice Finance’ we look at the many reasons why you should explore possible funding solutions for business. Whether it be bank overdraft, loans, equity, friends and family, or invoice finance there are plenty of options. It would be fair to say that under the right circumstances all of these forms of funding have their own particular merits, but there are also pitfalls when used in the wrong way.

For example, overdrafts and loans tend to be for fixed amounts which may not suit a growing business with increasing financial needs. The use of equity finance may involve a business owner giving away too much of their business just when they are starting to expand and build value. Invoice finance however, does not have either of these issues, funding grows with sales and generally there is no requirement to part with any equity.

So why doesn’t everyone use invoice finance?

Well, just like other funding solutions for business, invoice finance doesn’t suit all types of business either. It only applies to a business selling to other businesses, not to private individuals as it requires an order to have been completed and delivered prior to invoicing.   Generally any business that raises invoices for staged payments won’t use this method of funding. Often, there is a requirement for the business to have a spread of reasonable quality customers as well, but in an increasingly competitive market, a variety of invoice finance companies will take different views on this.

Whilst these aspects will make invoice finance unsuitable for some businesses, the vast majority could make use of it. The answer to why more don’t, seems more often to lie in a lack of knowledge of how it works, what it costs and some very outdated myths about the image of using external finance in order to provide cash flow to an expanding business.

There are many ways we can help with funding solutions for business and in future articles we will endeavour to identify some more myths and how reality is in fact so different.