Invoice financing is a popular way to fund the credit terms that many businesses offer to their customers. Invoice finance provides a facility amount that is a percentage of the amount due to you.
Although it is a useful way to release cash in the short term, invoice finance is restricted by the amount owed to you by your customers. So, it’s not always the best solution if you require a larger sum for longer-term plans such as an acquisition.
Factoring, which incorporates credit management, is often preferred by smaller businesses with lower-value invoices whilst invoice discounting and selective invoice financing are options for larger businesses with more creditworthy consumers.