When to consider invoice financing

When the decision is made to pursue an invoice financing, the company should have a clear understanding of its own goals, as well as the results expected from the invoice financier. This will allow the company to take full advantage of the comprehensive range of factoring or discounting services available. Factoring and discounting is a particularly viable alternative for a growing company and unlocking cash tied up in a sales ledger. In such a business environment, control is essential because managerial and financial resources are constantly being challenged. Invoice finance can ease cash-flow problems and provide some predictability in a rapidly changing situation.

Invoice finance can also increase the availability of working capital and alleviate cash-flow problems when a company takes on new customers; gains new customers; experiences a slowdown in collections; has increases in bad-debt levels; has heavy capital investment programme or just needs to cover unforeseen cash requirement. An acquisition, for example, can expose the firm to a new and unfamiliar customer base, thereby creating a need for enhanced receivables management. Since granting trade credit is comparable to making an investment in another company, a factor's credit protection helps prevent unsound investment decisions. Review our client case studies.