Any business owner will tell you that occasional cash shortages are a natural part of the ebb and flow of any company, and not necessarily a sign of a business in serious trouble. Many factors can contribute to these shortages, such as late client payments, end-of-month outgoings such as staff wages and unexpected expenses. Even the best-run company isn’t immune to these issues, but frequent cash shortages can have a knock-on effect that impacts on the ability of your business to trade profitably and develop.

If you find that your business is being hampered by cash shortages, invoice factoring can be an important lifeline, providing you with the cash you need, when you need it, without the need to take out a bank loan. However, in some cases you may prefer not to disclose your financial arrangements to clients and potential investors. In these cases, utilising confidential factoring services could be an ideal solution.

A confidential factoring facility ensures that the invoice factoring service performs all credit management under your business’ name. This service is generally a good choice for larger, more established businesses with a strong balance sheet. Invoice Discounting is the most common form of confidential factoring. In many other ways it is similar to invoice factoring; in which your customer invoices are used as collateral in return for instant capital of around 90% of the value of the invoices. Once the invoices have been collected (usually by the factoring agency under your name) the remaining 10% will also be released to you, minus a small service charge.

There are a number of key benefits to invoice factoring and confidential factoring compared to a bank loan. A good invoice finance company will be able to provide a flexible funding option that increases in line with your turnover, without forcing you to renegotiate your contract. It can also help you to simplify your finances and cut down your overheads, allowing you to plough those resources into other areas of your business.

With all the options available, there’s no reason to allow your business to struggle or stagnate due to cash flow problems, especially in the current challenging economic climate. Get in touch with a reputable, fully accredited invoice finance company to find out more about your options. It could be the best decision you ever make for your enterprise.

Invoice factoring allows you to release cash for your business utilising invoices as collateral. Hitachi Capital is a reputable and leading provider of recruitment finance solutions. Winner of the Factor and Discounter of the Year award at the CreditToday Awards 2011.

This entry was posted on Thursday, September 22nd, 2011 at 1:57 pm and is filed under Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.