Over
the last couple of years the media has been full of news
about the devastating effects of the aptly named 'Credit
Crunch'. With the drying up of credit to the public and
business sectors alike, many businesses have been affected
in varying degrees - whether by frozen credit facilities,
declining order books, increasing debts to their business
and even forcing insolvencies. For many business owners
there is perhaps a feeling that nothing can be done but
to 'ride the wave' and 'see it through'. But much can
be done!
Invoice
factoring and invoice discounting are defined by the collective
phrase 'Invoice Finance'. Invoice Finance allows a business
to raise money secured against the assets tied up in the
accounts receivable (outstanding sales ledger). This important
financing product allows a business to free up valuable
working capital, maintain operability and even regain
some competitive standing. These 'sales invoices' are
indeed a valuable asset but one that is often disguarded
when it comes to raising capital. Invoice Finance aims
to redress this often crippling facet of a business by
providing a welcome release of revolving finance against
your tied up cash flow.
There
are two main types of invoice finance which are known
as 'invoice factoring' and 'invoice discounting'.
With
'factoring', an invoice financier (known as a Factor)
will:
