For most firms, cash flow is an issue. Virtually every firm experiences periods where it is short on cash. For some, it is a seasonal occurrence; for others it happens only occasionally when business dips. Whatever the reason, an invoice factoring broker can help to bridge the gap.
They can help firms to borrow money against what, for most firms, is their biggest asset – their outstanding invoices. Very few firms are paid in advance for their products or services. Therefore, virtually every firm is owed money by its customers. They can potentially take this debt and use it as collateral to borrow money, which helps them to take their business through a flat period or enables them to invest in their business. Firms can even use this form of financing to allow them to buy the raw materials they need to take on a big order.
Factoring is a financial product that is used by thousands of firms, and which is suitable for virtually every type or kind of company. Multi-nationals use it all of the time, but it also works for SMEs.
How invoice factoring works
The process of borrowing money against your outstanding invoice is made simple when working with an invoice factoring broker. On most invoices, you can borrow up to 90% of their value. It is possible to borrow against just one invoice or several.
Factoring is one of the most flexible ways to generate the cash your business needs. It is even possible to borrow against international invoices.
When the customer pays what is owed, the loan is paid off. You can also use that cash to pay the arrangement fee and interest owed, which is perfect for cash flow.
Taking out recourse insurance at the same time as the loan will also protect you should your customer fail to pay their invoice. If you do not wish your customers to know you have borrowed against their invoice, that can be arranged.
If you are looking for an invoice factoring broker, contact us at Invoice Finance Scotland. We have been helping companies to generate cash from their outstanding invoices for years, so we have the experience you need to protect and grow your business.