Late invoice payments from customers? Overcome the problem with debtor finance - Business Finance

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7 Aug

Late invoice payments from customers? Overcome the problem with debtor finance

One of the biggest financial challenges faced by businesses is late invoice payments from customers as outstanding payments cause problems with cash flow.

Companies which have low working capital reserves can be affected the most by late payments which can lead to unpaid operating expenses.

Many companies have credit terms in place for customers which usually require invoices to be paid within 30 days of issue, but some can take more than 60 days to be paid, leaving a financial gap.

One way to prevent the cash flow issue it to use debtor finance to cover the shortfall between outstanding payments.

Debtor finance or invoice finance as it’s also known, is a short-term loan which allows companies to free up cash which is tied into invoices, allowing the business to continue to grow while generating revenue against unpaid invoices. A portion of the funds owed to the business is covered by the advance from the finance company.

It is suitable for any business which operates an invoicing procedure, or has its own finances tied into work in progress.

What is needed to obtain debtor finance?

A valid invoice and proof of any works completed is needed alongside the usual financial requirements such as the latest accounts.

What about the costs?

Terms can vary along with interest rates which can vary depending on the funder. Re-payments will be taken monthly in arrears.

How to apply?

V4B Professions is a finance broker which means we have access to more than 35 funders.  After contacting us you will be assigned an account manager who will guide you through the process and secure the best available rate. V4B Professions has helped thousands of companies including solicitors, construction firms, accountants and IT suppliers. Decisions on funding are usually made within 24 hours and each case will be managed by the account manager.

Benefits of debtor finance:

  • Flexible repayment terms
  • Ideal for businesses of all sizes, in most sectors
  • Generate immediate working capital
  • Stabilise cash flow