How Invoice Financing Can Improve Cash Flow

It’s one of the main issues that B2B suppliers face, particularly SMEs and sole traders. When a product or service is supplied to another business and an invoice raised, there is generally a delay before payment is made. It can take on average 30 days before funds return to your business and can be reinvested, used to cover running costs or get more product out into the marketplace. In many instances, especially when in partnership with large corporations such as supermarkets, this invoice payment delay can be anything up to two to three months.

That’s a long period when valuable cash flow is stalled.

Obviously, this situation causes problems for small and medium sized businesses working on tight or limited budgets. Invoice financing is designed to help companies get over this problem. When an invoice is raised, financing can be taken out to provide immediate payment, rather than having to wait until the invoiced company pays up. Once that invoice is fully recovered, the loan is simply paid back.

Cash flow is important to all businesses but more so to SMEs and sole traders who generally have to compete within tight margins. Getting the right invoice financing in place to ensure that money is available when a business most needs it is part of accepted operating strategies nowadays. That means a business isn’t left on hold while they are waiting for payment to be received. They can implement growth strategies and deliver more products and continue to thrive rather than treading water and twiddling their fingers while the client account department hangs onto that invoice.

For business to business companies that rely on a flexible cash flow to compete in their markets, invoice financing is the perfect solution for the immediate release of finances. It allows them to introduce working capital, pay wages and focus more on the future.

At PFC, we have access to a range of funders and can provide invoice financing to businesses across a wide spectrum, from those that have been operating for a while to start ups that have less of a credit history. It’s not just about providing loans to cover these payments, allowing companies to continue to operating effectively. It’s also about building strong relationships that are designed to deliver the financing options many SMEs and owner managed sole traders are looking for to make their businesses more competitive.