Darlene Menzies, CIO at Finfind shares top insights.
“Are your customers sometimes slow in paying their invoices on time? Does it cause you sleepless nights wondering how you are going to pay salaries? If so, then Invoice Discounting could be the right solution for your business.
“Invoice Discounting (or invoice financing) is a funding solution where businesses can receive immediate money based on their outstanding invoices. Instead of waiting for customers to pay you, you can receive a portion of the invoice value upfront from a lender and then they get repaid when the customer does their payment. Invoice discounting is an excellent alternative to applying for a traditional bank loan, as it is much easier to access and provides the relief you need to help with your cash flow gaps.
The main advantages of invoice discounting are that it is a quick and efficient application process, it offers flexible repayment terms, and ensure that you can meet your month end commitments. Invoice discounting is a less risky option for the lender as they don’t have to weigh the risk of whether you can afford to pay them back, they know that your customer owes you the money and will be paying.
“With some Invoice Discounters, businesses can maintain confidentiality with their customers being unaware of the financing arrangement, although this isn’t always the case. That said, customers understand that suppliers have cash flow needs to manage. Invoice Discounting is a common and acceptable short term cash flow bridging solution.
“Invoice discounting can be more expensive than other forms of financing as it provides quick, easy access to the funds, so it is important to carefully consider the fees and which invoices to discount before choosing invoice discounting as a financing option. That said, a bird in the hand may be worth it when you have salaries and month end commitments to meet.
“You can find funders that offer Invoice Discounting and match your particular business needs by going to www.finfind.co.za and clicking on ‘Find Your Funder’.”
________________________________________________________________________
Finfind is SA’s leading access to finance solution for SMMEs. It’s an innovative online platform linking finance seekers with matching funders, providing easy access to more than 350 lenders and 300 funding options. Go to www.finfind.co.za to find the business finance you need, it’s free and easy to use.
