August 8 2016.

Invoice finance is seen as a complex type of business finance, but behind the jargon, it’s actually a very simple concept. Quite simply, with invoice finance, your sales invoices become security for a loan or series of loans.

Let’s take a look at how it works.

How does invoice finance work?
Invoice finance is designed for businesses that make their money by invoicing other businesses for completed work. Offering payment terms to your customers, also known as offering ‘trade credit’, means that for the duration of those payment terms your business is owed money.

Invoice finance unlocks this money early, effectively transferring the delay onto the lender. This is how the process works step-by-step:

• Raise invoice for completed work
• Send to lender
• Lender advances agreed percentage of invoice value (up to 90 per cent) to you
• Payment terms pass
• Customer pays invoice
• You get remaining percentage of invoice value, minus lender’s fees

Why use invoice finance?
The fundamental benefit of invoice finance is that.....

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