Build Out Your Cash Flow

Build Out Your Cash Flow Buffer with a Flexible Line of Credit: Invoice Factoring

Every small business needs to have a cash flow buffer to ensure that they can expand and for their business to continue succeeding. One way of achieving this is through invoice factoring – an option that is available through accredited financial funders. By employing their services, you raise cash against unpaid invoices when and if you need to. This article will detail what invoice factoring entails, as well as its benefits for small businesses.

Why does my small business need a flexible line of credit and cash buffer?

Having a cash flow buffer is crucial for a small business because it ensures that you are covered for unexpected expenditure and have a contingency in place to react to unforeseen events. However, many small businesses struggle to maintain a healthy cash flow. This can be for several reasons with one of the fundamental issues being, the lack of robust credit control procedures and the need to provide extended credit terms.

This is where invoice factoring acts as a focussed and viable way to ensure a flexible line of credit – as and when you need it. As well as providing funding, credit lines also act as a “pick-me-up” for businesses that are struggling or experiencing tough economic conditions. 

It is a common misconception that maintaining cash flow simply means having a constant flow of money coming into your business. Cash flow is much more complicated than this and maintaining a healthy cash flow can be tricky for small businesses when you find yourself neck-deep in a growth spurt and struggling to fund it. Invoice finance is an alternative lending facility that offers flexibility and is often easier to secure for small, new businesses than other forms of finance.

What’s invoice finance?

People previously believed that invoice finance carried more risk than traditional finance, that it was expensive and, an option for those with no other alternative. This certainly isn’t true today. These days invoice finance companies, and particularly members of UK Finance are accredited reputable companies’ who offer their clients a viable funding alternative offering security, stability, flexibility, and access to cash when they need it.

If you need a flexible line of credit to help manage cash flow, then invoice finance is an important consideration for your business. Why try to do everything yourself when you can have access to professional outsourced credit control, 5 days a week throughout the year with no break for holidays, freeing you to attend those urgent jobs instead of chasing money you are owed – all this and access to your cash when you need it.

You choose which invoices to factor … you’re not tied in.

Historically, when you entered into an invoice factoring agreement you had to factor all your invoices, and whilst for many businesses, this is still often the best option, today’s funders are more flexible. You decide which invoices you want to factor, if you don’t need it, you don’t have to use it. 

Factoring gives you access to the value of invoices before they are paid – typically within 24 hours of raising them, and alongside this funding your provider will manage every aspect of your credit control, saving you time and money.

Invoice finance is now a recognised tool that small-medium businesses use to manage their cash flow, grow their business, and outsource their credit control. Choosing to use the services of an invoice financing company, gives you the flexibility to release cash from your invoices straight away; use the professional outsourced credit control or indeed a combination of the two.

Let us help you!

Entering into an invoice finance agreement is a fantastic way to get access to your money without giving up any equity or personal assets and allows for long term growth rather than short-term gain. Appointing an accredited lender to manage your invoice finance is a big decision – one that you need to get right. Contact us today so we can discuss your options.