Fast growing businesses can often struggle to raise enough finance to keep up with their demand for working capital. The situation, sometimes referred to as over trading, occurs when a company is taking on new business faster than it can afford to fund that business. It’s a cash flow issue made even worse by late or slowing paying customers. Invoice finance is used by many businesses to manage the varying payment terms and taking a facility with a lender who understands your business and is keen to support you moving forward is invaluable. We’ve put together a few things to be aware of when you’re choosing invoice finance, followed by our product offering at the end so you can benchmark against other invoice finance providers. And we’ve included a case study on how one tech company is using invoice financing to great effect to build their business.
Some financiers will apply limits to your funding. These include:
Fees vary between financier – some have up to 34. These may include:
Larger technology businesses who have used or are using a form of invoice finance will be familiar with personal guarantees and lengthier setup processes, typically owing to the complexity of the facility.
If your business is choosing finance for the first time, here are some terms to familiarise yourself with:
Process requirements vary between finance provider, it can be on an individual invoice, selective debtor, or whole book basis. Price can be based on the specific risk rating of one of your debtors or your entire ledger. You can choose to remain in control of your credit and collections process or outsource the management to the finance provider.
All financiers will offer demonstrations of their product / service. Here are some questions to ask during this phase:
Accelerated Payments offers an Individual Invoice Finance service – you select which invoices to fund and when. We approve your customer and credit insure the transaction so in case of default you will still receive up to 90% of the value of the invoice.
If that feels like a lot to take on board, or you are interested in finding out more, our expert team are available to talk you through the options vs your needs.
Toronto’s busy tech scene has a high demand for skilled programmers and other technology personnel. Our client Full Stack Resources successfully spotted and filled a gap in the market when it hit upon an original idea: offering a recruitment service to match skilled developers with vacancies, as well as a software development service that completes contract work for companies. But, as with all successful businesses Full Stack hit an increased working capital requirement: paying its developers directly, and an ever-increasing number of people on its further expanding payroll.
“We had worked with an invoice financing company, but we really needed more visibility and detail than they were providing, and that’s when we met Accelerated Payments. We immediately saw they had the solution we were looking for.” – Managing Partner Chris De Sousa