USING INVOICE FINANCE TO FUND YOUR BUSINESS

Invoice finance, or factoring has definitely become the ‘flavour of the month’ recently and, although it has only recently become popular in New Zealand, it is the oldest and most prevalent form of business funding used throughout the world. With invoice finance debtors on a company’s balance sheet are converted to cash and paid to the company in the form of a flexible overdraft. The overdraft is repaid by the debtors of the company and new funds are re-drawn as new invoices are produced. Invoice finance converts your business to a cash business and provides the precious cash flow your business needs for growth, funding it into the future.
There are many reasons to choose invoice finance and one is that funding is based on sales, not a fixed limit that must be reviewed continually. Also, your debtors are the security and there is no requirement for external property security and you are able to use invoice finance on top of your other borrowing facilities. Those using invoice finance are not bound by all of the financial covenants and red-tape of a traditional overdraft and are eligible for more funding than any other financial product that uses the same security.
Trillions of dollars are funded using invoice finance throughout the world annually so it makes sense for businesses to give themselves the added cash advantage of an invoice finance or a factoring facility. A factoring facility will allow a company a flexible overdraft that will grow with the business. Businesses can borrow up to 80% of the value of its invoices on an on-going basis, usually while retaining any existing banking facilities it may have.  The remaining 20% of the invoice value is made available when the debtor pays. A factoring facility allows people to convert their debtors ledger to cash immediately, then forget about them, allowing them to focus on growing their business.
Conversely, single invoice finance allows people to turn individual invoices into cash at their discretion. They are not locked into term contracts and can fund only the invoices they want, when they want – it’s that simple. Working Capital Solutions will pay 80% of the invoice value to your account and that single debtor is advised to pay directly to them for that invoice. The remaining 20% is paid when the debtor pays. Single invoice finance is a great idea for companies with only one or two large customers or intermittent cash requirements.
For more information, please visit their website at http://www.workingcapitalsolutions.co.nz