Invoice Factoring

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Businesses across the world have been factoring invoices for many years to boost cash flow. It negates business’s having to wait for 30, 60 even 90 days to get paid for work they have already completed. Traditionally when a business completes work for another business, they invoice out on payment credit terms.

What is Invoice Factoring?

Invoice factoring is where a business gets money paid against its invoices to release the capital which is tied up. The invoice financier will typically release up to 90% of the value of the invoice to the business as an up-front payment. For example, if a business had £100,000 of invoices that were owed to them on the sales ledger, the invoice financer could pay them £90,000 as an upfront payment. This allows the business to use the money as cash flow and grow the business as required. Once the invoice is paid the remaining balance will be paid to the business minus the agreed fees. The invoice finance company will collect payment of the invoices and administer credit control. Factoring invoices can be a useful tool to get positive cash flow and grow a business.

What is turnover?

An invoice finance factoring facility will be partially based on your levels of turnover. This is the amount of invoicing you generate during a pre-determined time frame commonly 12 months. An invoice financier asks you what your current and projected levels of turnover are. Pinnacle as a finance broker will be there to assist you with this if you are unsure or want to know how to work out your turnover levels.

Compare Invoice Financiers

Do you want to know if you are eligible for invoice factoring or want to compare different financiers to make sure you know you’re getting the best invoice finance facility? Then you’re in the right place! Pinnacle as a finance broker will not only answer any questions you have during the application process but be there throughout your business journey.

Who can use Invoice Factoring?

A business has to be invoicing B2B (Business to Business) for work they have completed. Pro-forma invoicing is not suitable for invoice finance. Invoice factoring can be very flexible in who it supports, and a list below names a few industries amongst hundreds of others that are suitable:

  • Recruitment Industry
  • Construction Industry
  • Haulage Industry
  • Courier Industry
  • Manufacturing
  • Food and Drink
  • Industry
  • Printing Industry
  • Healthcare
  • Security Industry

Factoring can apply for start-up businesses that need business finance. They may already know that cash flow could be difficult for tight. However, generally, an invoice financier will want to see a projected or current turnover of £5,000 per month.

Pinnacle can support with this if turnover levels are going to be close to or less than this. We understand almost every SME business in the UK must secure investment to grow. For larger corporate businesses invoice finance is prevalent due to the nature of the industry such as manufacturing where having positive cash flow is crucial.

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