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• 17 May

  How Invoice Discounting Can Help Your UK Company Grow

  

  How Invoice Discounting Can Help Your UK Company Grow

  For many UK companies, cash flow can be the difference between success and failure. Invoicing customers is an essential part of doing business, but waiting for payment can put a strain on your finances. Invoice discounting is a financial tool that can help businesses improve their cash flow and grow their business.

  Invoice discounting is a type of invoice finance that allows businesses to receive funding against their unpaid invoices. Instead of waiting for customers to pay, businesses can receive an advance on their outstanding invoices, providing them with the cash they need to grow their business. The amount of funding available will depend on the value of the outstanding invoices and the creditworthiness of the customer.

  FundInvoice is a UK-based invoice discounting brokerage that helps businesses find the best invoice discounting solutions for their needs. They work with a range of lenders to provide businesses with a range of options and to help them find the best deal.

  How Does Invoice Discounting Work?

  Invoice discounting allows businesses to receive funding against their outstanding invoices. When a business raises an invoice, it can submit it to the invoice discounter, who will advance it a percentage of the value of the invoice. The percentage will depend on the creditworthiness of the business, the value of the invoice, and the terms of the agreement. Once the invoice has been paid by the customer, the remaining balance, minus the fees charged by the invoice discounter, will be paid to the business.

  There are two types of invoice discounting: disclosed and confidential. Disclosed invoice discounting is where the customer is aware that the business is using an invoice discounter to fund their invoices. Confidential invoice discounting is where the customer is not aware that the business is using an invoice discounter. With confidential invoice discounting, the business will continue to collect payments from its customers and will be responsible for chasing any late payments.

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  Is Invoice Discounting A Good Idea?

  If you are looking at these products for the first time you may be asking "Is invoice discounting a good idea?". Below we consider some of the pros and cons, benefits and drawbacks so that you can make a balanced decision for your business.

  High Level Pros & Cons - Benefits & Drawbacks

  The benefits of ID are mainly based on the improvement of your cash flow, which can be substantial. In terms of drawbacks, there are very few but perhaps you may want to pledge your book debts to support other types of funding. You might also need additional services such as credit control, in which case factoring may be a better option for your company.

  Below we explore some of the benefits in more depth.

  Benefits Of Invoice Discounting

  There are several benefits of invoice discounting, including:

  1. Improved cash flow: Invoice discounting can provide UK companies with the cash they need to grow their business. Instead of waiting for customers to pay, businesses can receive an advance on their outstanding invoices, providing them with the cash they need to pay suppliers, invest in new equipment, or expand their business.

  2. Flexibility: Invoice discounting can be used on an ongoing basis or as a one-off solution to a cash flow problem. This flexibility means that businesses can tailor their use of invoice discounting to their specific needs.

  3. Speed: Invoice discounting can provide businesses with funding quickly. Unlike traditional loans, which can take weeks or months to process, invoice discounting can provide funding within a matter of days.

  4. Credit control: With confidential invoice discounting, businesses can continue to manage their own credit control. This means that they can maintain their customer relationships and ensure that their customers pay on time.

  5. Reduced risk: Invoice discounting can reduce the risk of bad debt if bad debt protection (BDP) is added to the facility. By receiving BDP against their invoices, businesses can protect themselves against customers who are unable or unwilling to pay.

  How FundInvoice Can Help

  FundInvoice is an invoice discounting brokerage that can help businesses find the best invoice discounting solutions for their needs. They work with a range of lenders to provide businesses with a range of options and to help them find the best deal.

  FundInvoice can help businesses with:

  1. Finding the best lender: FundInvoice works with a range of lenders to provide businesses with a range of options. They can help businesses find the lender that best suits their needs.

  2. Comparing quotes: FundInvoice can provide businesses with comparative quotes from multiple lenders. This means that businesses can compare the fees, rates, and terms of different lenders to find the best deal.

  3. Negotiating terms: FundInvoice can help if you need to negotiate the terms of your facility with an invoice discounting company.

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  By Glenn Blackman