Top 5 Ways in Which Invoice Finance Solutions Can Help Your Small Business Budgeting

As a small business owner finance could be one of the major sources of worry for you.   If you are worried about running up debt and feel that it could be too much for you to deal with as you set up your business then here are the top 5 ways in which invoice finance solutions like factoring can work for your small business…

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1. True Cost of Debt Is Reduced to near Zero

For a small business owner budgeting means cutting costs on all fronts, more so on interest and cost of debt.   There are several ways to do so – one of them is factoring. Indeed, factoring is a great option for small businesses. The perks of invoice finance and factoring is that the cost involved comprises of a service, interest on the discounted amount and an administration fee for each invoice issued, add to that an additional amount if bad debt protection is required.

Usually a breakdown of costs would work out as a service fee between 0.5% to 1% plus interest at circa base rate plus 2.5%.   In this way you can reduce the true cost of debt to near zero.

2. Steady Cash Flow

Every business requires steady cash flow to get things moving and expenses taken care of.   Invoice finance is your gateway to immediate cash without bothering about the credit rating of your business.

The other advantage being no need for long term contracts simply because through invoice finance you can discount as much or as little as you need within agreed limits. Moreover, unlike in the case of overdrafts this facility will not have to be renegotiated whenever it is increased.

You can borrow without worrying about security requirements and through factoring your small business gains access to professional credit collection services.

3. Meet Your Working Capital Needs

Invoice finance gives you access to working capital so you can pay your bills and salaries on time.   It’s a sure fire way to help you run your company smoothly and efficiently. Add to that the flexibility to make good purchase decisions, negotiate discounts and taking advantage of opportunities as they come and it sounds like the perfect solution to working capital problems faced by small businesses.

Through increased cash flow, better balancing of working capital needs and eliminating the need to seek overdrafts it is a tool that also keeps you firmly in control of your business.

4. Flexible Alternatives to Payment Delay

As a small business owner you are often faced with a situation in which you have a steady stream of orders to process and ship out but you might where despite your efficiency you have to wait 60 or 90 days for customers to make payments on those orders. In case you have a set of persistently late payers then your business growth could be adversely affected by their actions.

Most invoice finance solution providers offer flexible alternatives to payment delays. This will enable you to any hurdles caused by such late payments by customers.

5. Combat Competition with Ease

Invoice finance helps you gain the competitive edge quickly, with greater flexibility and minimal cost.   Cash crunches become the least of your worries as you deal with competition based on reliability and good service.