Invoice Discounting can help assist companies manage their cash flow, as Invoice Discounting tracks the sales cycle of the business. A fixed overdraft does not track the sales of the business which can often mean the trading business has a glass ceiling imposed upon its growth.
For many companies, the cash flow squeeze created by their customers wanting extended credit terms and yet their trade suppliers wanting faster payment terms can be the difficulty for the business – source usaloansnearme.com:
Invoice Discounting: how to use it. Invoice Discounting can help businesses sort out this cash flow squeeze. To achieve the best results from invoice discounting only draw what you need on any given day take full advantage of its flexible nature.
As your Company sales grow also known as debtors so too do your creditors or trade suppliers for the goods you need to purchase to complete or fore fill the orders you have. Put in its very crudest and simplest for the Invoice Discounting Company funds or bridges this gap.
The Discounting Company pays as much as 80 to 90 per cent of the value of the invoice. When the customer pays, the company receives the balance. This allows the company to borrow money without having to secure the loan on any assets, while allowing its borrowings to grow in line with sales. Invoice Discounting services typically cost between 0.05 and 0.95 per cent of turnover, plus interest on the cash advance known as the discount charge. For many companies, this is a price worth paying.
Invoice Discounting can also provide a speedy injection of funds. Extra cash flow can turn a company’s affluence around in a week, giving it the money to make essential payments to main trade suppliers.
Discounting is sometimes described as a Flexible Business Loan which a company can draw down every time it issues a new invoice. That kind of flexibility is crucial in the current marketplace with overdrafts more difficult to obtain.
Invoice Discounting can offer the perfect solution to other forms prohibitive cash flow finance.