How does Invoice Finance Work?
You are owed at 31st March £100,000
You have a current bank overdraft of £25,000
You invoice customers weekly £7,500
You want more working capital?
In our example an invoice finance company could potentially advance 80% of the amount you are owed – therefore 80% of £100,000 = £80,000
From this of course you would probably have to clear your bank overdraft of £25,000 leaving you available funds of £55,000.
Then at the end of week one when you raise an invoice for £7,500 you will have 80% of that available to you also.
When your customers pay – now to the invoice finance company – the remaining 20% is made available.
Sixty to One
So you can turn 60 days waiting for payment into 1 day – pretty good odds!