What Is Invoice Financing (and how will it help you)?

What Is Invoice Financing (and how will it help you)?


Invoice Financing is a service that can help you manage your cash flow significantly better than you may currently be doing. Some business owners still aren’t sure what invoice financing is, however, and others may not know that they have multiple options when it comes to invoice finance.

In the interests of helping your business to succeed, we wanted to take some time to lay out what Invoice Finance entails and how it could help your business.

Invoice Factoring

british-poundInvoice factoring is a form of lending in which you can essentially sell your unpaid invoices to an invoice financier, who will pay you some of it upfront and collect the full amount from the customer. Once the full amount has been paid, the rest of the funds will be released to you, for which service you will pay a fee. So what are the advantages of invoice factoring?

  • Upfront Funds: You will be able to access the funds arising from a sale almost immediately after issuing the invoice, so you won’t have to worry about figuring out how much money you should have compared to how much you actually have.
  • Less Time Chasing Invoices: Once the invoice is ‘sold’, it becomes the financier’s job to chase it up, leaving you with less to worry about, spending less time and resources on trying to have invoices paid and more time to focus on your business
  • Steady Cash Flow: Once you get into an invoice factoring deal, it will be much easier to keep track of what is coming in and what is going out, making your cash flow more predictable and easy to manage.

Invoice Discounting

Invoice discounting is your other option for invoice finance. With invoice discounting, your invoices are not sold on, but a financier will be able to lend you a percentage of the money that you will receive. Once you have received payment from the invoice, you will be able to pay this money back, plus fees accrued from the service. Much like invoice factoring, this has the advantage of allowing you to access your money sooner and more reliably than otherwise. What other advantages does invoice discounting offer you?

  • Management of Invoices: Rather than relying on someone else to manage your invoices, you will be in control of chasing up payment. While this does require extra resources, it also allows you to retain a personal element to your invoicing procedure for clients who would rather deal directly with you.
  • Personalisation of Service: While you will have to manage the collection of invoice debt yourself, you will be able to maintain a closer relationship with your clients, as they will be primarily dealing with you and not a third party.

As you can see, there are different advantages for different types of service. TBOS can set up an invoice financing arrangement as part of our back office solutions for recruitment agencies.

Total Back Office Solutions

You can outsource your whole back office to TBOS for a customisable and personalised solution that will also help you more efficiently manage the administrative aspects of your business. As well as being able to set up your invoice finance arrangements, we will help manage your accountancy, credit control, payroll and timesheet processing, as well as help you to keep on top of your finances at all times.

If you find the administrative side of your business is getting in the way of allowing you to actually run your business, then outsourcing is your ideal solution.

For more information on invoice factoring, invoice discounting and back office solutions, call us now on 0845 8811 112 or contact us here. We can customise a solution for you, whatever your needs.