Wholesale
Do you own a wholesale company? Is waiting for your invoices to be paid slowing your work down? Here’s how invoice finance could be the answer…
Contents
- How can invoice finance help wholesalers?
- How does it work?
- A real-world example
- What to do next
Benefits of Invoice Finance for Wholesalers
It is the same scenario you see time and time again – you have provided goods or services, sent out your invoice and then you may need to wait 30, 60 or 90+ days to receive those funds. Your business may then come across a product that you can get a discount on, and you need enough working capital to pay for the stock. Because your cash is tied up in invoices, you are not able to pay for the new stock upfront.
This is where an invoice finance facility could help. Instead of waiting for and chasing your debtors to pay, you could receive up to 80% of your invoice value that same day. So, how does it work?
Step-by-step guide to invoice finance
- Send your invoices
Firstly, you send your invoice to your customer, and another copy to your chosen lender.
- Receive up to 80% of the invoice value
Depending on the terms agreed, you will receive up to 80% of the upfront invoice value on the same day as when you issued the invoice.
- Your customer pays their invoice
Your customer pays their invoice within the agreed terms of 30, 60 or 90 days.
- You receive the remaining 20%
Once your customer has paid their invoice, you will receive the remaining 20% of the invoice, minus the lender’s fee.
A made-up example: We Are Wholesalers Ltd
We Are Wholesalers Ltd have completed an order for a company and send their customer an invoice of £10,000. They expect the invoice to be paid after 30 days from the end of the month. In the meantime, We Are Wholesalers Ltd speak to a supplier and can receive a large discount on stock prices if they purchase in the next couple of days. This is great news to find stock at a lower price, but at that time, We Are Wholesalers Ltd do not have the cash flow to take advantage of the low price.
Fortunately, We Are Wholesalers Ltd have an Invoice Finance facility. They send a copy of the invoice to their lender and receive £8,000 that same day. They can now take full advantage of purchasing the stock at a low price for their business. After 30 days, the lender receives the invoice payment and sends We Are Wholesalers Ltd the remaining £2,000, minus their fee.
Having the Invoice Finance facility has meant that We Are Wholesalers Ltd have been able to grow their business incredibly fast compared to if they were having to wait to receive funds from their debtor.
How do I get an Invoice Finance facility?
This is where Contact Business Finance comes in! We have a wealth of knowledge in the world of Invoice Finance and can put you in touch with the most suitable lender. In a free-of-charge service, we will compare the market for you to find what would be best for you and your business.
And it’s not just Invoice Finance we can help with – we can look at business loans, asset finance, trading finance and more.
