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Your Guide To Invoice Finance

Hitachi Capital Invoice Finance

Your Guide to Invoice Finance

Hitachi Capital’s ‘Guide to Invoice Finance’ aims to help you understand the world of

invoice finance better, to get you through the industry jargon and enable you to consider

how invoice finance can really benefit your business.

There are so many different terms and references made when talking about invoice

finance, discounting or factoring, that it can become confusing. This guide aims to make

things much clearer for you and your business.

What is Invoice Finance?

Invoice finance, sometimes referred to as factoring, is simply a way of improving your

company’s cash flow. It is a method of raising cash against your business invoices

through a reputable finance company. Invoice finance allows you to increase your

working capital, whilst ensuring your business has the cash flow it needs to run

efficiently today and to survive and grow in the future. This is particularly important in

today’s business climate.

The difference between Invoice Factoring and Invoice Discounting

The differences between invoice factoring and invoice discounting are straightforward.

The service you choose depends on the needs of your business.

Invoice factoring is when a business assigns its customer invoices as well as

outsources the administration and debt management of its sales ledger to a finance

company like Hitachi Capital Invoice Finance.

This method has benefits for you and your business. It frees up your time to concentrate

on more productive issues instead of spending your time chasing payments. You can

also reduce administration overheads and it’s a better option than arranging an overdraft

with your bank. As your company grows, so does the available funding. You don\'t even

need to negotiate new terms.

Invoice discounting is a funding only service, when a loan is simply provided by the

finance company, using the customer invoices as collateral. You retain control of your

invoice administration and debt management. The finance company is essentially an

invisible interface between you and your suppliers.

However If you choose confidential invoice discounting, the finance provider can handle

the credit control, in a confidential manner, so that your clients are unaware of the

involvement of the finance provider.

These methods of raising capital are usually more cost-effective than a bank loan or

overdraft. They’re not dependent on the company\'s credit rating as the company’s book

debts are usually the only assets managed to secure funding.

Hitachi Capital Invoice Finance, Guide to Invoice Finance, Nov09

Benefits of using Invoice Finance

There are a number of reasons why you might choose invoice finance for your business.

Some of the benefits are outlined below.;

1. Improves cash flow – cash flow is the lifeblood of your business, so it’s important

that it is managed effectively. Having access to money that is owed to your business

will allow you to be more competitive and to further grow the business.

2. Releases cash – invoice finance enables you to raise cash against your business

invoices, rather than having to wait weeks or months for payments.

3. Saves valuable time – your business is relieved of the administrative burden of

invoice management, allowing you to concentrate on other important elements of

your business.

4. Offers flexibility – invoice finance gives you better access to your finances, allowing

you to be more flexible. You can also negotiate prompt payment discounts from your

suppliers, giving you greater savings.

Step by step guide to the invoice finance process

In a nutshell, there are five simple steps to the invoice finance process.

1. You supply your goods or services to a customer and issue an invoice for payment.

With factored invoices, they are issued as payable to the finance company.

2. You send a copy of that invoice to the finance company who then pays the agreed

percentage advance against the invoice total, typically within a couple of days.

3. When your customer settles the invoice, payment will either be made direct to the

finance company or in the case of invoice discounting, the payment may need to be

made into a business account held with the lender.

4. The finance company then pays you the balance of the debt minus the agreed

service charges.

5. Monthly sales ledger statements are issued to the borrowing business by the finance

company.

Hitachi Capital Invoice Finance, Guide to Invoice Finance, Nov09

Why use Hitachi Capital Invoice Finance?

Hitachi Capital Invoice Finance Ltd is a subsidiary of Hitachi Capital (UK) PLC, part of

one of the world’s largest and most respected groups. We are independent of other

banking relationships, so our services will not impact your main bank or credit facilities.

Hitachi Capital is a member of The Asset Based Finance Association (ABFA) and an

independent financial company, so you can be certain that our invoice finance is

reputable and reliable. We offer our services to companies with a turnover between

£500,000 and £10,000,000, including phoenixes.

Contact Us Today

If you want to find out more about how invoice finance can benefit your business or

discuss a six month no obligation trial, contact one of our client managers today. We

are one of the only companies around offering this trial.

Call: Freephone on 0800 1105 005

Visit: www.hitachicapital.co.uk/invoicefinance

Email: invoice.finance@hitachicapital.co.uk

Article Source: http://www.articlesbase.com/finance-articles/your-guide-to-invoice-finance-1825397.html

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