If lengthy payment terms are preventing your company from getting the cash it needs quickly, invoice factoring can improve cash flow by providing a faster way of getting paid. Typically, invoice factoring involves your company selling its invoices to a third party factoring company. The factoring company will pay your company a large percentage of the invoice up front (usually 60%-80%). Your customer then pays the factoring company according to their usual payment terms. Once the customer has paid their invoice, your company receives the rest of the invoice payment from the factoring company, minus their fee.
This allows you to unlock cash that is tied up in an existing asset. The capital is raised by using a key piece of equipment as security for a loan.
This is a well-established way of paying for necessary plant and large equipment that a business needs. Rather than paying for assets in one large payment, a company can pay for the equipment in instalments over a period of time.
Investor capital can be used to expand your business and take your company to the next level. This often comes with experienced commercial advisors that can assist you with your company’s growth.
The key to getting the best possible result for your business is to seek professional advice the moment that you notice that your company is going through cash flow problems.
If you think that finance for the new company may be difficult to obtain, Bridgestones can help you by discussing various situations and introducing you to an excellent range of finance providers. Call us now to discuss finance options on 0800 781 0014.