If you run a small business you will often face the issue of late payments from your customers. When you find yourself in this situation, invoice financing is a good option to consider. Invoice financing is a method of funding in which the invoices for the bills receivable by your company are held as security by an invoice finance company.

When choosing an invoice financing company for your business, you should consider a number of things.

Size of the value advanced

The advanced value that you get is important. There are three major determining factors which are:

• The policy of the invoice financing company
• The status of your invoices
• The status of your customers

Most invoice financers will give you 90 percent of the finances receivable by you. The remaining 10 percent will be paid to you on completion of payment by your customers.

Invoice finance charges

Invoice finance charges are another important consideration. Invoice financing generally involves two charges, namely a regular service fee and an interest charge.

The regular service fee is charged for maintaining your ledger on a day to day basis. The second charge- also known as the interest charge- is calculated from the amount from each individual invoice. These charges are variable depending on the provider you choose.

Providing you follow the correct procedures, invoice financing could be a major benefit to your company.