Some thoughts about Finance 01.12.2021
Invoice Finance – No, it’s not factoring.
It may look like Factoring, but it’s not.
And that the problem we sometimes have in explaining what the difference between invoice finance and what a factoring company does is the foremost hurdle to presenting to clients why we think Invoice finance is better.
What Invoice finance does is finance one invoice.
Just one, and when your client pays, the debt is extinguished. That’s it – just one invoice.
Yes, you might have another invoice or multiple invoices funded simultaneously, and you may do it repeatedly, but you sit in the driver’s seat, and when you don’t want or need funding – you stop.
You don’t want to fund this week or this month, fine, that’s our agreement. We encourage you to use invoice financing in a measured way.
No contract ties you in, and if you didn’t quite get the last sentence, we would say it one more time, no contract ties you in.
By its commercial nature, Factoring takes over your accounts receivables and, subject to the form of funding, it may run, manage, and control your debtor’s ledger.
In many cases, you have lost control, and we know of many instances where the cost of getting out of one of these contracts requires a remortgage of real estate.
Gavin waring, our CEO of Your Business Angels, is more dramatic in his description. He says, “Single Invoice Finance products kept our clients in control, where factoring for SME’S is usually a recourse Factoring facility which ties a business owner up – it’s like financial crack, a money drug they can’t get off”.