Improving Cash Flow
Managing cash flow is a vital aspect of keeping any business afloat. Depending on your requirements we can organise financing both short or long term.
Here at PMC, we will work with you to assess your liquidity and to see if invoicing is right for you. We can organise funding to facilitate your cash-flow needs. Our team has strong connections with cash-flow lenders who will be able to offer flexible arrangements that suit your financial situation.
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Types of Invoice Finance:
Factoring: The financier takes control of the sales ledger and collects payments directly from customers.
Invoice Discounting: The business retains control of its sales ledger, with the financier providing funding against the invoices.
How Does Invoice Finance Work?
In invoice finance, a third-party financier advances a percentage of the invoice amount (typically 70-90%) to the business upfront. Once the customer pays the invoice, the remaining balance, minus a fee, is released to the business.
Invoice Finance for Small Businesses
Small businesses, in particular, can benefit significantly from invoice financing. It provides them with the necessary funds to cover operational expenses, invest in growth opportunities, and navigate the challenges of uneven cash flow without taking on additional debt.
Who Needs Invoice Financing?
- Small Businesses: Often face cash flow challenges due to delayed payments.
- Growing Businesses: Seeking to expand operations without straining working capital.
- Seasonal Businesses: Experiencing fluctuations in cash flow during different times of the year.
What is the Alternative to Invoice Finance?
- Business Loans: Traditional loans provide a lump sum amount for various business needs.
- Lines of Credit: Businesses can access a predetermined credit limit for short-term financing.
- Personal Savings or Investors: Some businesses opt for personal savings or seek investors to address cash flow challenges.
Is Invoice Financing Expensive?
The cost of invoice financing varies based on factors such as the financier, the business’s creditworthiness, and the terms of the agreement. While it incurs fees, the benefits of improved cash flow and financial stability often outweigh the expenses.
Is Invoice Finance a Good Idea?
Advantages:
- Improved Cash Flow: Access funds tied up in unpaid invoices, ensuring a steady cash flow.
- Flexible: Suitable for businesses of various sizes and industries.
- Efficient: Quick access to funds compared to traditional lending.
Considerations:
- Cost: Invoice finance comes with fees, impacting overall profitability.
- Customer Perception: Businesses need to consider how clients may view third-party involvement in invoice payment.
Is Invoice Finance right for me?
Determining if invoice finance is suitable involves assessing your financial situation, understanding the purpose of the loan, and having a clear exit strategy. Consulting with financial experts like us can provide valuable insights to help you make an informed decision.