Invoice Financing, What is it?

The latest trend in business financing is the invoice financing. This kind of financing is somewhat similar to Accounts Receivable Factoring.

But what exactly is Invoice Financing?

As its name implies, this kind of financing will provide funding for your net 30 to net 60 invoices. With this kind of funding, you are just like getting a quick payment on the invoice and at the same time enable you to cover business expenses without waiting up to 60 days for your client’s payment. This will help you to have a stable flow of financing. If you have a good financing flow, you can manage your expenses well and you can have the opportunity to invest on other areas.

Invoice Financing transactions are mostly structured as purchase. The factoring company finances the invoice in two installments. The first installment is made as soon as you give the invoice, this is usually 80%. The other 20% will cover any discrepancies or underpayments.

With this kind of financing, you can avoid the complication when you pursue for quick payments.