Many businesses who invoice their customers for payments often find that it can take a while (sometimes up to 120 days) to receive the money. This can end up being incredibly damaging, especially if overall cash flow is adversely affected by delays. Companies like Touch financial offer invoice financing services to help alleviate this, so here is some information to consider.

What is it?

Invoice financing involves selling your customer invoices to a third party in order to receive a cash payment immediately. You might, for instance, receive around 80% of the value of the invoice upfront, and then the remaining 20% once the customer has paid the invoice in full.

The lender will, of course, deduct their fee before you receive the final sum, but you are essentially paying a relatively small amount for much greater efficiency and cutting payment waiting times to a minimum. It can therefore be used as a useful tool by many businesses, especially those which are having cash flow problems.

Improves Cash flow

The ability to create a constant stream of money coming into your business has a great many advantages, especially since you can use the money for daily proceedings. Stunted cash flow will often lead to stagnation, as you never have a reliable source of money to spend on the business. As such, many people get caught in the cycle of having to wait for payment before they can take more work on.

The cash flow that invoice financing provides eliminates this problem, and means you can confidently move forward with your business without having to worry about funding.

Stimulates Growth

The most important thing that invoice financing facilitates is business growth, as this is essential for any business to stay afloat. As a result of improved cash flow, you can reinvest capital in your business to ensure it is up to date and progressing. This could mean purchasing new assets, such as a car or building, or hiring new staff.

You can also focus on attracting new customers as you should always have the money to cover costs. Eventually, once your business has begun to really get going, you can cut out invoice financing as you will most likely have enough capital to fund operations yourself.

Invoice financing is a handy tool for those businesses which could benefit from a much smoother cash flow and the cutting out of invoice payment waiting times. Increased growth leads to greater profits and business success, so consider using invoice financing to help stimulate your business.