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Invoice finance – Even though commonly used in the business industry, only a handful actually knows what it actually means. The key to understanding invoice financing is to know its basics so you can use it to your advantage like help your business get through in tough times. How it works is simple. You use your unpaid invoices as collateral and present it to the lending company which will then grant you up to 85% of the total invoice. You can then use the money to pay your bills, salary etc. When the actual payment of the invoices arrive, the lending company will then give you the rest of your loan excluding the loan fees.

invoice-paid

Everyone who actually understands how this time of financing works find it simple which it actually is. You don’t have to waste time chasing down your clients for payment. It means no more tossing and turning on your bed thinking if your payment arrives tomorrow so you can pay the due bills. Take note that it is now the lending company’s concern if and when your client pays so it drastically lessens your burden while doing business. Applying for invoice financing is faster than what most banks offer – with only 2-3 days of approval period.

Aside from providing you the emergency cash you need for salary and bills payment, you can also use the money you get from this type of lending option to start a business. This is very useful if you have a brilliant business idea but no money to back it up. Although banks has several offers in business financing, the requirements and approval period are usually stringent which can be frustrating. With invoice discounting, you don’t have to deal with banks. It’s the same concept as payday loans.

invoice-calculations

The difference between payday loan and invoice factoring is that the amount of money you can borrow in this type of financing option is much more than in cash advance loans. When it comes to fees, you don’t have to worry about the astronomical rate that payday loans is famous of as you can avail of invoice finance in low, reasonable fees. Invoice financing can help you deal with unstable cash flow so you can concentrate in making your business a success rather than spending most of your effort looking for money to cover for expenses. It is a simple, short-term solution that everyone can take advantage of.

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