Over the last few years, there have been many business challenges with Covid, wares and economic instability resulting in inflation.
These factors are putting enormous pressure on businesses, driving some into administration, while others are forced to lay off workers and scale back.
Economic recovery requires financial security
Traditionally, businesses rely on investors and credit to finance their operations. However, economic conditions have triggered many businesses into precarious positions that are unattractive to investors, while also making investors generally more cautious. At the same time, businesses are using what credit they can access to keep themselves afloat.
Businesses that offer clients credit terms can take advantage of invoice financing to improve cashflow.
What is invoice financing?
Invoice finance is a way for businesses to secure some payment on outstanding invoices immediately, so that those funds can be reinvested into the businesses as soon as possible. Additionally, it’s a way for businesses to quickly access funds without waiting for a customer to get around to payment. Rather, the initial payment comes from their financial institution.
Instead of waiting for invoices to come due and customers to pay their bills, businesses can exchange the outstanding invoice for cash up front by working with an institution like Fifo Capital. When discounting the invoice, Fifo Capital issues most of its value in cash within a few hours, and the remaining funds when the client makes payment. Unlike a loan, this does not involve borrowing any funds, so only a very quick credit check is needed. Additionally, this means that funds accessed in this way are not considered loans, and do not involve the business taking on any additional liabilities.
Using invoice financing to boost your recovery
Many businesses will face significant debt when recovering from economic conditions, and be forced to attempt to revitalise their operations on very tight budgets. This might make it difficult to manage the costs of scaling their operations back up to a profitable level, which is necessary to begin any meaningful recovery. Invoice finance, as well as similar tools such as supply chain finance, can help businesses to boost the limited working capital available to facilitate their growth. Most importantly, invoice discounting is a way for businesses to increase the total capital available to them without impairing their ability to borrow or attract investment.
The benefit of credit free financing
Invoice finance, as well as other alternative financing tools can provide them with the means to get back on their feet as quickly as possible. To explore how these options can help them, it’s important for business leaders to work together with their financial representatives, and discuss what approach will best serve their business.
Contact your Fifo business advisor or visit https://fifocapital.ie/invoice-finance/ for more information.