There are several instances when companies perform very well and as such they sell goods on credit to their customers only to recover the same at a later stage. While few companies include this strategy as their marketing technique few do so as goodwill that they share with the clients/customers. But despite the fact that the businesses are doing extremely well, if the dues are not recovered over a period of time, it can be a very unstable situation for the company financially. As a result, the cash flow of the company is badly hit. Under such circumstances, invoice financing can come to the rescue of these companies.
In this write up, we will find out how this form of financing will benefit the companies or businesses at large. Delve deeper into the subject by going through the paragraphs below.
Benefits of invoice financing
Unless a company is sound in its cash flow, even the biggest corporate stalwarts can fumble in their business activities. However, the companies that depend on inflow of cash are the worst affected. These include the wholesalers and the ones that have to order goods in bulk. Invoice financing comes to the rescue of these companies. Let us see how.
· By opting for invoice financing (especially in form of factoring), companies get adequate cash just by issuing an invoice. This financial arrangement is prevalent widely in which companies opting for Invoice Finance Brisbane are opting for factoring and so are businesses in Adelaide too.
· The company does not have to take the hassle of collecting dues from the customers. This is because in case of factoring, when the company issues invoices to the lender, the lender will pay majority part of the cash up front leaving aside a certain percentage. The upfront amount is decided beforehand. The lender will follow up customers and recover payments. Depending on the amount that is recovered and that which pays for the cash proceed (in form of loan), the rest is given to the company.
· Since the lender also known as the factoring company is involved in collection of dues and takes the responsibility of maintaining the ledger, you save a lot of time, which can be used for your other marketing campaigns and strategies.
· Another form of invoice financing is known as invoice discounting. Unlike factoring in which the lender maintains the ledger account and does the collection of dues job from customers, in discounting the company is allowed to maintain the ledger and also collect the dues. Discounting is usually opted for by larger companies that require fund for capital growth.
· The financial arrangement regardless of whether it is invoice factoring or invoice discounting is particularly beneficial for those companies that have huge cash involved and cash flow comprises huge amounts of cash. For these companies they also have a good amount in their invoice. As such, the amount that they can avail as loan against the invoice value is also a considerable amount that can bail them out of financially stressful conditions.
In this write up, we will find out how this form of financing will benefit the companies or businesses at large. Delve deeper into the subject by going through the paragraphs below.
Benefits of invoice financing
Unless a company is sound in its cash flow, even the biggest corporate stalwarts can fumble in their business activities. However, the companies that depend on inflow of cash are the worst affected. These include the wholesalers and the ones that have to order goods in bulk. Invoice financing comes to the rescue of these companies. Let us see how.
· By opting for invoice financing (especially in form of factoring), companies get adequate cash just by issuing an invoice. This financial arrangement is prevalent widely in which companies opting for Invoice Finance Brisbane are opting for factoring and so are businesses in Adelaide too.
· The company does not have to take the hassle of collecting dues from the customers. This is because in case of factoring, when the company issues invoices to the lender, the lender will pay majority part of the cash up front leaving aside a certain percentage. The upfront amount is decided beforehand. The lender will follow up customers and recover payments. Depending on the amount that is recovered and that which pays for the cash proceed (in form of loan), the rest is given to the company.
· Since the lender also known as the factoring company is involved in collection of dues and takes the responsibility of maintaining the ledger, you save a lot of time, which can be used for your other marketing campaigns and strategies.
· Another form of invoice financing is known as invoice discounting. Unlike factoring in which the lender maintains the ledger account and does the collection of dues job from customers, in discounting the company is allowed to maintain the ledger and also collect the dues. Discounting is usually opted for by larger companies that require fund for capital growth.
· The financial arrangement regardless of whether it is invoice factoring or invoice discounting is particularly beneficial for those companies that have huge cash involved and cash flow comprises huge amounts of cash. For these companies they also have a good amount in their invoice. As such, the amount that they can avail as loan against the invoice value is also a considerable amount that can bail them out of financially stressful conditions.