Invoice finance is a kind of asset-based finance that help businesses to recover slow paying invoices. There are normally 2 ways of invoice finance. In the first option, invoices are sold to a lender in exchange for immediate payment by paying a nominal fee. The other option is to secure a revolving line of credit against debtors book of the business.
One of the main qualifying requirement is to have invoices from a creditworthy and established third party or commercial clients.
Spot Factoring – This is another form of quick finance where finance is raised on a single invoice instead of the full ledger book. The funding is quick to raise and confidentiality can also be maintained by not disclosing to all debtors or commercial clients.
Advantages of Invoice Finance
- Quick and easy finance
- Helps manages cash flow
- Manage clients and cash effectively
- Protection from client insolvency