If you need to increase your cash flow, invoice financing — sometimes called invoice factoring or invoice discounting (though the terms are not interchangeable) — may be the solution.
As a small business owner who works primarily on a credit basis with your customers, you’re likely no stranger to lean times. Though you may have finalized a lucrative project, your bank account will not reflect the fruits of your labor until your customer pays. And depending upon your terms, this could take as long as 90 days. While you wait, you still have to meet payroll, pay suppliers and cover other operational expenses.
With invoice financing, you can get instant access to the cash you’re owed and bridge temporary cash flow gaps or act on a time-sensitive business opportunity.
How much will invoice financing cost you, though? To find out, plug the numbers into our invoice discounting cost calculator.
How Can Invoice Financing Help?
- Select invoices you wish to finance.
- Lender will issue you a percentage of the invoices, known as an advance. The remaining balance is held in reserve.
- Lender charges a fee known as a factor (or discount rate), often weekly, until the invoices are paid in full.
- With invoice factoring, once the invoices are paid, the lender issues you the reserved balance, minus fees.
Learn more about invoice and accounts receivable financing.