When your debtor pays, the balance of the invoice is made available to you – less a service fee.Either your own credit controller or the invoice finance provider’s sales ledger service carries out the invoice collection procedure.Usually within 48 hours (see different factoring companies for invoice advance % details) Funds are made available of a certain percentage of the face value of the invoice.You send the invoice details to the invoice finance provider.You provide the goods/services to your customer and invoice them.New, post-credit crunch bank capital regulations have resulted in banks transitioning companies away from unsecured loans and overdrafts and on to this mode of lending. Invoice finance is more attractive to a bank because it depends on the collateral of the invoice due from the debtor. Invoice discounting and factoring have become a major source of working capital finance since the restriction of bank financing, as a result of the credit crunch. They refer to the same essential process: an asset-based working capital solution that allows businesses to get advances on cash they are due from customers, rather than waiting for those customers to pay. Invoice factoring and invoice discounting both help ambitious companies expand and grow.
