Prepare the necessary documents to support your loan application. This may include financial statements, tax returns, bank statements, and identification documents. Ensure that all documents are up-to-date and accurately reflect your business's financial position.
Prepare the necessary business plan to support your loan application. This is typically something that your broker, like Guavas, can assist with.
Once you have gathered all the required documents and prepared your loan proposal, submit the application to the selected lender. This is typically done online by your broker or in-person by yourself, depending on the lender's application process.
The lender will conduct a thorough evaluation of your application, including a review of your credit history, financial documents, and loan proposal. They may also perform additional due diligence, such as verifying information, assessing collateral (if applicable), and conducting credit checks.
If your loan application is approved, the lender will provide you with the loan offer, which includes the approved loan amount, interest rate, repayment terms, and any associated fees. Carefully review the terms and conditions before accepting the loan offer. If you have any questions or concerns, seek clarification from the lender before proceeding.
Upon accepting the loan offer, the lender will initiate the loan disbursement process. The funds will be transferred to your designated bank account, allowing you to access the capital and utilise it for your business needs.
One of the primary benefits of invoice financing is improved cash flow. By accessing immediate funds through invoice financing, businesses can meet their day-to-day expenses, pay employees, invest in growth opportunities, and cover any unexpected costs. This eliminates the need to wait for extended payment terms, helping businesses maintain a steady flow of working capital.
Traditional bank loans can be time-consuming and require extensive paperwork, while invoice financing offers a quick and straightforward alternative. Once a business submits its invoices to the factoring company, it can receive a significant portion of the invoice value within a short period, usually within 24 to 48 hours. This rapid access to funds enables businesses to promptly address their immediate financial needs.
Late or non-payment of invoices can lead to bad debt and financial instability for small businesses. With invoice factoring, the factoring company assumes the risk of collecting payment from customers. This reduces the business owner's worry about non-payment, allowing them to focus on core operations rather than chasing after unpaid invoices. Businesses can protect their cash flow and mitigate potential losses by transferring credit risk to the factoring company.
Invoice financing is a flexible solution that grows alongside the business. Unlike traditional loans, which often have fixed borrowing limits, invoice financing allows businesses to access funds based on their sales volume. As the business expands and generates more invoices, the available funding increases accordingly. This scalability makes invoice financing an attractive option for small businesses looking to manage their cash flow efficiently.
Unlike other financing types, invoice financing does not typically require business equipment or physical assets as collateral. The invoices themselves act as the collateral, making it accessible for businesses that may not have significant assets to pledge. This opens up opportunities for businesses that may not qualify for traditional loans due to a lack of collateral or limited credit history.
Invoice financing often comes with additional benefits, such as credit control services provided by the factoring company. Factoring companies specialise in managing credit collections and monitoring customer payments and take that responsibility on as part of their invoice finance service. This proactive approach to credit control ensures a healthier cash flow and minimises the impact of bad debt on the business. It also relieves businesses from the burden of credit control tasks, allowing them to focus on core business activities.
Invoice financing can be a cost-effective solution compared to other forms of financing. While costs are associated with invoice financing, such as factoring fees or discount rates, the benefits gained, such as improved cash flow and credit control, often outweigh the expenses. Because this is essentially a "secured" form of debt, it can be significantly cheaper than alternatives like loans and overdrafts. Businesses must evaluate the overall impact on their financial health and growth potential when considering invoice financing.
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No, you don’t have to create an account. But there are a few advantages if you create an account.
You never have to enter your billing and shipping address again
Find all of your orders, subscriptions and addresses in your account
Download invoices of your orders
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© 2024. Guavas Finance Ltd
© 2024. Guavas Finance Ltd
