What is Invoice Finance and When Should You Use It?

October 24th, 2014

Although there are many ways to mange cash flow into the business , it is imperative that the business owner understands the ways cash moves invoice financingin the business and manage it effectively in order to stay afloat. All cash advice becomes redundant when small business owners find themselves in the middle of financial struggles, however with a proper understanding on invoice finance will help the firm maintain a healthy cash flow.

There are many companies that offer financial help to small businesses, however there are different factors that should be put into consideration. One of the most commonly talked about cash flow solution is invoice finance, most people ask themselves what is invoice finance and when should you use it? Different people have their own name referring to the same some call it debtor finance, sales finance, receivable finance, cash flow finance among others. however invoice finance is simple to understand, it is a method in which the business use its debtors book as a release and security of up to 85% of the cash tied up for money due from the unpaid invoices.

The company offering the cash flow will use it as a guarantee to offer the small business cash to maintain its survival or make further stock purchases. This type of financing can be used if your business is usually relying on temporary staff and wait for invoices to mature after a month or so. Here you can use your debtor’s book to seek immediate cash to pay off the employees to keep the business running as you wait for you invoices to mature after a month. Invoice finance covers three main categories of finance solution although in most scenarios, although the aim is still the same freeing the business from financial dilemma, the categories include


In this class, the financing company will take up the management of the firm sales ledger and credit control to assure them of the incoming invoices. In simple terms the company purchase the invoice for a large percent of their worth and give the small business the cash needed, thereafter they will follow up with the debtor using the normal protocol. Most small business can make use of this because they lack the essential facilities to manage their own credit control. An example of a Factoring company would be Invoice Funders.

Invoice Discounting

This is similar to factoring in that the financing company releases cash to the small business while using the invoices as security; however, it is more confidential because the customers are unaware that the invoices are used as security. However unlike factoring the small business retains its credit control management, it is a safe move if you do not want your clients to know that their information is used. find out more about this at www.invoicefunders.co.nz

Asset-Based Lending

Unlike the predecessors asset based lending is just like as the name suggest the lending company will release cash to the small business and use business assets as security. The assets may include equipment, machinery, property, stock among other key business properties. It can be used when a small firm wants to raise huge sums of money.

Welcome To HighRide – NZ’s Small Business Financing Advisor

October 23rd, 2014

We are just working on our content. We will have lots of financing advise for small businesses in New Zealand coming soon. Be sure to check back in a few days.

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