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Sunday, March 31, 2013
These particular types of unsecured business loan are quite valuable should you be a small company that has outstanding invoices from big clients. A lot of corporations are demanding 3 month invoice payment terms in order to do business with small organisations, and they often take the whole of the 3 months to pay you. Unless you possess a reasonable cash balance to keep you going through these delays, you could find it hard to keep your business moving forward.
Generally there's no need to fill in huge amounts of documents or sign up to long-term contracts, the only security will be the invoices you borrow against as the loan will be secured using the money your customers owe you. The invoice finance process is relatively straightforward. You decide the invoices you'd like to be given an immediate payment for by making use of the process. The invoice financing company then contacts your client to verify the amount owing, and then arrange to receive the payment instead of you. There will be a small fee to provide this sort of finance, but you will generally collect about 95 percent of the invoice amount.
Given that the invoice financing organisation is going to be speaking with your clients, it might be sensible to speak with them before that happens just to tell them just what you are looking to do. They shouldn't have any problem with what you're proposing as there is no additional cost to your client, and they won't need to pay any earlier than the terms and conditions of your original invoice. Given that invoice finance typically requires a one-time fee per transaction, it can be an easier way for business owners to acquire the money they need so that they can make sure their businesses keep moving, and this is a good reason why this sort of borrowing has grown to become an increasingly popular way for organisations, big and small, to improve their cashflow.
You shouldn't be asked to pay any charges for setting up or closing an invoice financing account, and all the charges you will have to pay will be outlined in detail prior to agreeing to make use of this sort of finance or any cash will be paid. This way, you are able to come to an intelligent business decision with regards to the benefits of this sort of finance option, and whether it is the most appropriate short-term borrowing option for your company. Once everything has been sorted out, the vast majority of invoice finance firms are able to provide you with the around 80% of your invoice amount in a few days, and you are going to be paid the balance (minus the invoice financing organisation's service charge) when your client pays the outstanding invoice.
Irrespective of the scale of your business, these challenging economic times mean a steady cash flow tends to be more essential than ever. Therefore if you don't want to be reliant on clients that take forever to settle, invoice finance might be an excellent means of ensuring that you receive your cash as soon as possible.