If you’re a small business owner, your major problem will be maintaining cash flow. You will experience a shortage of cash from time to time. This will halt the business and work against its future growth. You will also be worrying constantly about how you will be able to maintain cash flow of your company. Your clients will not make their payments in time which will put you in a difficult position. You will be left with unpaid invoices and no way to manage your immediate cash needs.
This is where invoice finance becomes helpful. You will be able to use the unpaid invoices to obtain an advance. The most common way to deal with low cash is to apply for a loan. But when you’re applying for a loan, you will need to offer assets for collateral. But you won’t need to do this in invoice financing. You will only be offering up your unpaid invoices. You can borrow against the unpaid invoices. But it should be noted that you need to have commercial invoices to participate in the process. This may not be an option for you if you’re dealing with the public.
What you have to do is create an account for yourself with an invoice discounting service and then link your accounting software to it. You will be able to choose what invoices you need advance payments on. Once you’ve made the necessary arrangements, you will get the amount deposited to your bank account in a very short time. There will be a period of time for you to repay the advance with interest. This way you will have enough cash on hand for your day to day operations. Once you are paid by your client, you will be able to settle what you owe to your provider. But you need to be careful in choosing a provider. They have to flexible enough that they are willing to offer you an advance and they have to be reliable as well. Invoice financing is quite an easy process for you to keep up the finances of your business. It’s not an expensive method so you won’t face bankruptcy. If you’re a small business owner, you can sell your unpaid invoices to a factoring company at a discount. But in this method, the ownership of the invoices goes to the factoring company. They will proceed to collect the payment directly from your clients. But invoice financing will allow you to maintain your relationship with your clients. Your clients will not be aware of the invoice financing process unless you inform them of it. Visit this link http://www.keyfactors.com.au/services/invoice-discounting/ for more details regarding invoice discounting service.