Summer is coming to an end, and if your business is a summer-oriented one, you could be heading into the slow season with slumping sales and cash flow struggles. Invoice financing could be just the solution you need to help you get through the downtime.
As the tourists head home, kids go back to school, and the weather cools off, businesses like campgrounds, restaurants in tourist areas, or water sports rental companies will often find their income suffering. There are many ways you can accelerate cash flow during this season, but in the meantime, invoice financing offers a way to bridge the gap between your income and your expenditures.
What Is Invoice Financing?
As the name implies, invoice financing is a means of getting financing by using your invoices. Fundbox advances 100% of the value of your unpaid invoices, depositing the full amount of each invoice into your business bank account. You then pay back the advance over the course of 12 week—or earlier with no early repayment fees.
Invoice financing might sound a lot like factoring, but the two methods aren’t the same at all. Here are a couple of key differences:
- You get more money. While factoring companies only advance a percentage of each invoice’s value, Fundbox advances the full value of your invoice.
- Your relationship with customers isn’t affected. Unlike factoring, you remain responsible for collecting on the unpaid invoices. That means your customers never have to know you’ve used your invoices as a financing tool, so they won’t worry about your company’s financial health.
What Invoice Financing Can Help With
Invoice financing is a great cash management tool for seasonal businesses. As your high season ends, you may have made a lot of sales, but you likely haven’t collected on all of them yet. However, your business still has bills to pay while you wait to get paid. Invoice financing can tide you over during that time.
Invoice financing is useful for financing a variety of needs your business may have during the slow season, including:
- Paying employee salaries
- Buying new equipment
- Maintaining or upgrading existing equipment
- Paying outstanding bills
- Implementing new marketing and advertising campaigns to increase business
- Purchasing inventory
Advantages of Invoice Financing
Financing your business with your outstanding invoices has a lot of advantages over traditional financing methods.
- It’s fast. No lengthy application to fill out or waiting weeks to hear from a lender. With Fundbox, all you have to do is create a free account in seconds and link it to your bookkeeping app. Once you are approved, you’re ready to go.
- You’re in charge. Invoice financing offers great flexibility because you can choose which invoices you want to finance—you don’t need to finance all your invoices. For instance, if you have a large invoice that won’t be paid for 90 days, you can choose to finance that one in order to give your business a cushion.
- You get the money right away. When you select an invoice to finance, Fundbox will deposit the amount of the invoice into your bank account within one to three days. Funds typically arrive in your bank account on the following business day.
- You can repay the money early. Unlike some financing methods, there’s no early repayment penalty if you want to repay your loan before the repayment period is over. Fundbox waives fees for the remaining weeks so you only pay for the time during which you used the money.