Businesses that use invoice finance to manage their cashflow share their experiences in quotes below. They use a facility so have an obligation to regularly sell their invoices and they pay fees for the facility.
Selective invoice finance from Cash for Invoices Limited has the additional benefits of:
NO ongoing fees, NO commitment to sell any invoices, and NO security other than a refundable retention (subject to satisfactory performance by the debtor).
Find out for free and without obligation how you can get cash quick and easily using selective invoice finance from Cash for Invoices Limited. Click here.
“For a business which does have to deal with slow payments this [invoice discounting] is the only way to have a finance line which is flexible enough.” Evolution Foods
“We deal with supermarkets on a day-to-day basis and they often have payment terms of 60 days...Using invoice finance has been the only way for us to have a flexible enough credit line to deal with payment terms which are dictated to us.” Evolution Foods
“Whereas a loan is a fixed amount which I might not even use all of, using our invoices is great to fund small investments in things like people and technology. It may cost a bit more but the flexibility makes it worth it.” Data Duplication
“Invoice finance gives me flexibility but if we were to do something big like buy our own premises then it would probably make sense to do that through a big loan.” Data Duplication
“We wouldn’t be sitting where we are right now without the invoice finance line”Dawn Prints
Quotes from Growthbusiness.co.uk Nov 2013 (link)
Single invoice finance from Cash for Invoices Limited can provide an excellent solution to filling temporary cash crises. It is superior to conventional invoice discounting facilities offered by banks, because there no security is needed, there is no on-going commitment to selling further invoices and no fees are charged. As long as the credit status of the debtor is acceptable, the company selling the invoice can collect up to 95% of the value of the invoice within a few days of contacting Cash for Invoices Limited.
Find out for free and without obligation how single invoice finance from Cash for Invoices Limited can provide an excellent solution to filling temporary cash needs. Click here.
What is an invoice?
Invoices are a form of trade receivable, i.e., they are an asset on a company's balance sheet representing money to be received by that company at some future date - at the time the debtor pays the invoice. At that time, the debtor (payer of the invoice) will no longer appear on the company's balance sheet and instead it will be replaced by an equal amount of cash (which is also an asset). There is no net increase or decrease in assets, merely conversion from one to another.
If that debtor does not pay, then the asset will be written off as a bad debt (a cost in the profit & loss account) and assets will then reduce (no cash came in). Granting time (credit) to buyers to pay for their purchases is therefore an example of credit risk for the company giving time.
If later - perhaps through credit collection procedures - the debtor pays the invoice, then the bad debt is added to the p&l as a profit (income) and cash increased by the amount received. The assets increase and are offset by an increase in profit (equity on the balance sheet). All is well again.
Selling an invoice to Cash for Invoices Limited
Before the debtor defaults, the company can sell the invoice to a company such as Cash for Invoices Limited that will offer to buy just one invoice when the company wants to sell. There is no commitment for the company to sell, and no commitment for Cash for Invoices Limited to buy. The company wants to exchange an invoice for cash - perhaps it needs the cash sooner than the invoice payment date.
Cash for Invoices Limited will make an offer after conducting due diligence on the selling company and on the debtor especially. The debtor is a key concern for Cash for Invoices Limited because if there is a subsequent default then Cash for Invoices Limited will not require the seller to buyback the invoice. The sale is therefore non-recourse and Cash for Invoices Limited has to suffer the consequences of a default. It will commence steps to recover the debt. These can include issuing letters for payment, appointing a solicitor, making a court claim, or making a claim under a credit insurance policy.
Retention to mitigate credit risk
To mitigate the potential costs of trying to recover payment on an invoice that Cash for Invoices Limited purchased but which goes into default, Cash for Invoices Limited will retain up to 10% of the value of that invoice from the purchase price. If there is no default (the debtor pays the invoice on time and in full) then Cash for Invoices Limited will pay the retention to the seller when the debtor pays the invoice.
Features of single invoice finance offered by Cash for Invoices Limited
In addition to being non-recourse, Cash for Invoices Limited does not require a commitment from the seller to sell all its invoices, nor will Cash for Invoices Limited charge an arrangement fee for a purchase. Cash for Invoices Limited will not ask for ongoing fees because there is no facility between the seller and Cash for Invoices Limited. The transaction is entered into whenever the company needs cash and Cash for Invoices Limited agrees to purchase the single invoice or multiple invoices. Compared to bank factoring facilities, Cash for Invoices Limited's single invoice finance service is far more simple and has no tie-ins and far fewer fees, just one.
Supplier invoice finance offered by Cash for Invoices Limited
Cash for Invoices Limited also helps companies who need more time. Why do they need more time? Because suppliers who have sent them an invoices are demanding payment but the company needs more time to pay.
In such situations, Cash for Invoices Limited can offer to buy the supplier single invoice for cash. That cash is paid to the supplier not to the company Cash for Invoices Limited is helping. Having got the supplier off the company's back, Cash for Invoices Limited allows the company the extra time it needs to get cash and then to use that cash to pay Cash for Invoices Limited for the supplier invoice Cash for Invoices Limited purchased.
Cash for Invoices Limited's single invoice finance service therefore helps companies (sole traders and SMEs) who either need cash or who need more time.
To find out more about Cash for Invoices Limited's single invoice finance service contact Cash for Invoices Limited.