Why companies use alternative funding and invoice finance
In order for growing businesses to keep their operations running smoothly, it’s important that they have their cash flow in order. Luckily, there are now many alternative funding methods which businesses can access to help ease cash flow pressures and bring their finances under control.
We’ll take a look at why businesses are increasingly turning to alternative funding options, with a focus on a growing player in the space – invoice finance.
Since the financial crisis of 2008, traditional lenders have become more stringent on their criteria for business funding. Start-ups and smaller companies tend to be viewed as riskier investments compared to larger companies.
Over the past decade, alternative finance providers have looked to fill the gap. They provide a flexible range of cash flow solutions to cater to every type of business, and usually cover a wide range of industry-specific needs.
One of the more popular and effective forms of alternative funding is invoice finance. In the decade since the credit crunch, use of invoice finance by UK and Irish businesses has increased by over £8 billion.
With invoice finance, you get an advance secured against your unpaid customer invoices. This means you get quick access to cash flow, without having to wait 30-120 days for your customer to pay.
Here’s how it works:
- You provide the goods/services to your customer and invoice them
- You send the invoice details to the invoice finance provider
- The invoice finance provider gives you a certain percentage of the face value of the invoice
- Either your own credit controller or the invoice finance provider’s sales ledger service carries out the invoice collection procedure
- When your debtor pays, the balance of the invoice is made available to you – less a service fee
It’s a type of funding which scales with your business growth and provides you with a simple way to keep cash flow levels both healthy and consistent.
If you’re looking for alternative funding to help give your business a cash flow boost, we can help.
MarketInvoice offers a range of invoice finance solutions to help businesses get quick and easy access to funding.
Our aim is to help entrepreneurs spend less time worrying about finance, so they can focus on growing their business. That’s why we have funded thousands of UK businesses to the tune of more than £1 billion.