Due to the difficult economic climate, many companies of all sizes are struggling to keep their heads above water and maintain a healthy cash flow. In the past, an unhealthy cash flow could have dire consequences- such as bankruptcy. However, nowadays there are several methods that can help. One of these is invoice financing.

Put simply, invoice financing is the sale of unpaid invoices to a financing company. The financing company then provides cash equal to around ¾ of the amount of the invoice, although this can differ between different companies.

In the process of invoice financing, cash is given even before the invoice amount is settled. In spite of receiving slightly less than the amount of the invoice, a business still receives enough money to run smoothly. This offers great peace of mind.

Once the invoice is in the hands of the financing company, it is up to them to chase up the outstanding payment. This frees up time for many businesses, who can spend the time that they would spend chasing unpaid invoices on other tasks. Once the invoice has been paid, the financing company then provides the remainder of the cash owed (with a service fee deducted).

There is no doubt that invoice financing has given many companies a much needed lifeline.