Invoice Finance Can Help Businesses Going Through a Rough Patch

As a business owner, admitting that your business is struggling can be the hardest thing, but if your business really is in danger – or is going backwards in anyway – it’s essential that you assess the situation rationally. There is almost always a solution if you know where to look.

Two of the key areas that cause businesses to get into trouble are cash flow and the inability to secure the required funding to keep growing. Other common problems often stem from these: declining profitability due to under-investment; getting overtaken by new competitors; or struggling with the burden of expensive business loan repayments. 

Invoice finance can help with all of these problems, providing the business owner has correctly identified the underlying causes and has a plan to turn things around.

Assessing your Business 

Many business struggle and eventually fail, because the owner is so caught up in the everyday running of the operations that they fail to see the bigger picture. Problems then build up; bills are not paid on time; margins decline and costs spiral. All resulting in a cash squeeze. 

It is therefore essential that you regularly step back and assess your business’ performance objectively – whether you feel things are going well or not. Maybe you can bring an extra pair of eyes to the job by sitting down with your accountant, or a trusted advisor from the business world, and taking a cold look at the figures?

In particular, cash flow is an area that you need to pay attention to. This is often the first area to really suffer when things are going badly, and it can lead to a domino effect throughout your business. Put simply, you always need enough money in the bank to pay your next set of bills and you need to know you’ll have enough for the next set, and the next.

Using Invoice Finance to get Back on Track

Providing you still have orders coming in from reliable customers, invoice finance can really help you manage your cash flow effectively, invest where necessary and get profitability back on track.

Invoice finance works by providing the bulk of the money, usually up to 80%, tied up in an invoice to you, within hours of your issuing it. It is not debt, it is simply advancing you your money upfront instead of waiting for your customers to pay, in 30, 60 or 90+ days, so it won’t add to your worries in that respect; and it will automatically be settled once your customer pays.

This means that not only does a business gain clear clarity on its cash flow, it can also raise a substantial amount of money at once, on an ongoing basis each time you invoice. This can provide crucial investment at a time when banks are not prepared to lend further, or simply strengthen your working capital situation as you push for new orders. 

Businesses using invoice finance are always ready to meet bills as they come in and don’t get caught out when a customer is late in paying. They are also usually able to raise extra cash – out of their own accounts receivable – when a need or opportunity arises. 

Many businesses soon find that using invoice finance instead of bank loans is an easy way to improve their profits: because invoice finance is flexible and cost effective, it is based on your revenue and not profitability and it can be substantially cheaper than a business loan.

Find out how much you can raise through invoice finance by calling OptiPay today.

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