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How to use invoice financing to stabilise cash flow

Is your business struggling with cash flow problems? Invoice financing could provide you with a welcome solution.

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Is your business struggling with cash flow problems? Invoice financing could provide you with a welcome solution. When customers take time to settle their invoices, it can have a serious impact on your company's cash flow. Even if your order books are full, without timely customer receipts there is less money to purchase stock, service overheads or pay your staff's wages, putting the ability to fulfil new orders at risk. The bank overdraft or loan has always seemed like the obvious choice to help a business through challenging times. However, with the banks particularly hard hit they are reviewing existing facilities as well as refusing new ones. What is invoice financing? Invoice financing is a cost-effective and practical option to ensure that cash flow stays steady and keeps businesses stable. Invoice financing allows businesses to unlock the value of their unpaid invoices. The invoice finance firm will take on the risk of waiting for the customer to pay and will agree an upfront payment of an agreed percentage of the value of the outstanding invoices. When the customer pays, the balance of monies is then paid over. Choosing invoice finance means that up to 90% of the value of an invoice can be released back to the business within 24 hours of its issue. How much does it cost? Costs of the service can vary, but with approximately seventy different providers in the market, there is a lot of competition for your business. Using an independent broker can provide you with impartial advice and the best solution for your business. About the author This article was written by our partners at wk5.com. Along with their partner company, F.A. Simms and Partners, they provide many of the benefits under our Finance Director business solution and our Credit Control Guide, which is available FREE to our members. Members: If you're trying to recover a debt, you can discuss your options by calling our debt recovery helpline on 0845 130 1722.

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