Satisfactory cash flow is unquestionably critical for every business. Unfortunately, many small businesses struggle to have adequate cash flow, and poor cash flow, according to the SCORE Association, is the #1 reason that small businesses fail. A useful solution is invoice financing. 

What is Invoice Financing? 

Invoice financing is simply an advance of capital to a business owner in exchange for the business’s unpaid invoices. An invoice financing company will typically advance up to 85 percent of the value of the invoices and then remit the balance, fewer fees when the invoices are fully paid. Because the invoices themselves serve as the collateral, funding can be easier to obtain than other types of loans. Processing can be rapid, with funds often received as quickly as in one day.  

There are two variations on invoice financing: invoice factoring, where the invoices are sold to a third party, and an accounts receivable line of credit using the unpaid invoices. 

Funds from invoice financing can alleviate the problems of late payments to suppliers, not being able to pay employees, cover operating expenses, or missing debt payments. Additionally, funds can be used to seize important opportunities and continue marketing strategies. 

What Are the Pros and Cons of Invoice Financing? 

The Pros Include:  

-Overcome further cash flow problems with unpaid invoices. 
-Fast access to working capital. Many invoice factoring specialists and alternative lenders offer a fast online application process.  
-Easier to qualify for and obtain compared to other types of financing. 
-No other collateral is required. 
-A low cost to the business if customers pay on time. 

The Cons Include: 

-The cost is difficult to evaluate upfront. The final fees will be paid based on the time that it takes customers to pay. 
-This approach can have higher fees than other types of financing. 
-This is not an option for most B2C businesses. 

Seek Expert Funding Assistance 

Contact Triport Lending to get the funding you need from a trusted commercial finance company. We offer a wide range of financial solutions.