Late payments are all time nightmares of business owners, which can cause a significant strain on your business in terms of cash flow. With a help of a reliable debtor financing facility, you can now immediately receive cash advance on the basis of your credits. This instant and continuous cash flow can help your business to meet the needs for development capital, operating expenses, break-free production runs, and opportunities to fulfill more orders.
Advantages of debtor financing
The advantages of using debtor financing is that the funds you receive is directly proportionate to sales, which means the more sales you make with break-free production will again convert into more cash to raise your profit margin. The major advantages of debtor financing include;
- Additional cash flow for growing companies.
- Raising working capital for startups.
- To bridge any gap between slower payments.
- Get on top of any obligations.
- Effectively meeting operating expenses without any flaws.
The features of flexible debtor finances include;
- No long-term contracts or lock in periods.
- No annual fee or monthly administration fee
- No quarterly or bi-annual audits’
- No restrictions in terms of minimum volume
- Quick (usually 24 to 48 hours) approval.
- No other security or collateral needed.
Let us check how debtor finance works;
Step #1: You invoice your clients after fully delivering products of services.
Step #2: Send the financier a copy of your invoice.
Step #3: Verification at the financier’s end
Step #4: Approval on clearing the verification and up to 80% of the invoice amount, less a processing fee, is instantly released.
Step #5: Remaining 20% is delivered when your customer makes the payment, less any sort of accrued charges.
Debtor financing FAQ
Now let’s review some of the major questions asked by the debtor finance users and answers for them.
Q: Do I need to finance all my invoices?
No, the concept of key factor flexibility derives to a concept that you don’t have to submit all your invoices. You can check out how much amount needed to be advanced and can decide whether to claim your invoices fully or partially. Single invoice financing is also possible.
Q: How much debtor financing costs?
Most of the providers charge about 3% to 6% of the invoice among as admin fee and other charges. However, based on whether the financier takes care of the payment collection from the client or note, the processing fee may vary. You need to check it out with the provider, and can compare the charges of various providers to finalize on one providing you the best offer. There are no monthly or annual charges usually in case of debtor financing.
Q: How fast I can get the money in hand?
Debtor financing is one of the quickest modes of cash advance, in which the funds can be released in maximum 48 hours. In come cases if verification takes more time, the approval may get delayed.
So, next time when you are in fund urgencies to ensure flawless business operations, debtor financing is one of the best options to explore. This not only offers hassle-free cash advance, but also won’t put you into any liabilities overtime.