There comes a time in the life of every small business when cash gets a little tight and decision makers are forced to look for outside sources of funding. While a lot of small business owners might hop on the chance to secure a loan, not everyone is comfortable with the prospect of taking on debt when they don’t need to. For these risk-averse owners, invoice financing is a much more sensible funding option.
What is invoice financing?
Quite simply, invoice financing allows you to borrow against your uncollected receivables. Instead of letting unpaid invoices collect dust and hinder your business, you can use an invoice financing service to advance payments on outstanding invoices. You then repay the advance, plus a small fee, within a certain time period (usually 12 weeks or so).
The terms “invoice financing” and “invoice factoring” are often used synonymously, though they’re not the same thing. Factoring requires small businesses to sell their unpaid invoices to a third party at a hefty discount. Making matters worse, customers end up paying the factoring company, not your business—which can be slightly embarrassing, to say the least.
Invoice financing allows small business owners to reclaim control of their cash flow. Instead of scrambling to put together money to pay bills each month, they get the peace of mind that comes with knowing funds are only just a click of the mouse or tap of the finger away.
In addition to helping small business owners pay regular operating expenses, invoice financing services can also give companies enough padding to develop new products; launch new marketing initiatives; buy new equipment and technology; open additional locations; and remodel their storefronts, restaurants, and offices, among other things.
How can I get started with invoice financing?
Fundbox makes invoice financing easier than ever before. Creating an account is free and simple: There’s no long approval process or mountain of paperwork to fill out. Next, click to connect your accounting platform to Fundbox. Once approved, you’ll see your available invoices in your Fundbox dashboard. Select which ones you want to advance, and voila, the funds are deposited in your bank account in as soon as one business day. You then have either 12 or 24 weeks—your choice—to repay the advance, plus a small fee. Repay early, and the remaining fees are waived. Best of all, they have an iOS app!