If you own a business that conducts business-to-business transactions, invoice financing can be an option for you. Invoice financing allows a business to use their accounts receivable as collateral for their financing. The lender will determine the loan amount based off of your customers and their amount owed to your business. In cases of invoice factoring, the lender would finance your business by buying your business invoices and collecting directly from your customers. With invoice financing, the lender will finance you around 70- 85% of your invoices, while withholding 15-30% until the customer pays. However, while you wait for the customer to pay off their invoice, the lender may charge a small amount of interest per week until the customer pays. Once the customer pays off their invoice to your business, the lender will disburse the remaining 15% minus the accrued interest payment.
One of the main benefits invoice financing offers to business owners is the ability to get capital without waiting for their customers to settle their accounts. This removes any contingencies, allowing the business to reinvest their cash back into the growth of the company as soon as possible. Invoice financing may also be easier to qualify for since the financing is primarily dependent on your customer invoices. Unlike a standard business loan which would rely on your business’s ability to repay the loan, invoice financing relies on your customer’s ability to pay your business back.
Opportunity Business Loans offers three different types of invoice financing solutions for small and medium-sized businesses. If you don't know which option fits your business needs best, give us a call today. Our team of financial advisors would love to secure the loan that fits your individual wants and needs most.
Invoice Factoring is common for businesses in industries like clothing and manufacturing, where lengthy accounts receivables are normal. Factoring is when the financing company purchases your business’ invoice at a discount.
The financing company will then be responsible for collecting the payment on the invoices. Your business will typically receive anywhere from 50-90% of the invoice value in a lump sum amounts up front based on the risk profile of your clients.
Invoice Financing is similar to factoring except it isn’t a sale of your accounts receivable. Instead, is works by using your accounts receivable as collateral to get an advance, but you are ultimately responsible for collecting the payments from your clients.
If your outstanding invoices become delinquent, you will be responsible for the amount the financing company advanced you. This option is usually suitable for businesses that have a strong accounts receivable and either don’t have or don’t want to use other business assets as collateral.
A Receivables-Based Line of Credit is based on a percentage of the value of your outstanding receivables. The amount of your credit line will generally be between 80-85% of the value of your outstanding receivables.
You will pay a pre-negotiated interest rate based on your balance and, when an invoice gets paid, your balance will be reduced. This option is popular for small businesses because it is usually cheaper than invoice factoring or invoice financing.
Below is a list of industries and businesses that could benefit most from invoice financing.
Opportunity Business Loans offers the most convenient and affordable invoice financing options for small- and mid-sized businesses in a variety of different industries. If you need to free up your cash flow and have outstanding invoices, apply for Invoice Financing today. We would be happy to advance you some capital to cover the day-to-day operational costs of your business.
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If your business is looking for invoice financing, apply today with Opportunity Business Loans. We can give you a better chance of qualifying for financing options by connecting you with hundreds of different lenders within our large network. With so many different lenders, you’ll have a greater chance of successfully finding the type of financing that is perfect for your business. When you apply with us today, we’ll do most of the work for you so you won’t need to go from bank to bank or fill out an enormous number of applications. Just fill out one form with us, and over a hundred different lenders will have access to review your business profile and create an offer that’s right for you. Let Opportunity knock on your door today.
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