The-Most-Common-Industries-that-Use-Invoice-Finance-Factoring-and-Discounting

Which industries is an invoice finance facility suitable for?

Invoice finance works well for many industries. It provides the flexibility to respond swiftly to market changes and can serve as the foundation for a growth strategy. Let’s explore different industries where factoring and invoice discounting are especially fitting, highlighting the reasons why companies opt for this form of borrowing.

 

Construction factoring

In the construction sector, the hierarchy of contractors and sub-contractors often results in prolonged payment delays for those lower down the chain. Construction factoring tackles this issue, benefiting both individual contractors near the bottom and small companies in the middle.

Receiving funds promptly for completed work allows you to confidently bid on future projects, competing on an equal footing with larger firms. With the assurance of available funds, you can efficiently order materials and hire additional staff. The factor takes on the responsibility of chasing payments, freeing you to focus on expanding your business.

 

Debt finance for the logistics industry

When hiring drivers, whether for continuous contracts or a single delivery, there may not always be sufficient immediate cash without risking monthly financial plans. Factoring and discounting provide dependable cash injections, often within 24 hours of invoicing.

In the logistics sector, businesses must incorporate flexibility into their operations to compete with larger counterparts. Borrowing money against completed work can propel smaller companies ahead in the market, enabling quicker response times and increased agility.

 

Finance for manufacturing

The manufacturing sector has specific cost demands that invoice finance can address. It frequently involves a continuous cycle of machinery repair and maintenance costs, alongside regular payroll and premises expenses. Business owners often find themselves managing finances meticulously to stay afloat.

If you’re in manufacturing and have faced cash flow challenges, especially while waiting for payments, significant advantages can be gained by ‘selling’ your sales ledger to a specialised factoring company.

Borrowing is constrained by the invoiced work amount, allowing you to effectively scale your business growth within the cycle of invoice funding without the risk of overtrading.

 

Printing and Publishing

Invoice finance offers printing and publishing companies a flexible means to evolve and expand. No need to wait the usual 30 or 60 days for payments; a portion of each invoice is swiftly advanced by the lender. This enables you to undertake the next significant contract or address crucial machinery repairs.

Immediate improvement in cash flow emerges, providing a sustainable path for growing your business. An impeccable credit rating is not essential; the focus is on doing business with credit-worthy customers, as funding is based on sales invoices.

 

Professional services

Factoring serves as a solution for professional and business services firms that extend credit terms to their clients. Waiting for up to 90 days for payment is limiting, and the process of chasing payments is not only time-consuming but also carries the risk of unsettling valued clients.

Invoice finance addresses this challenge by swiftly advancing working capital, typically within 24 hours of invoice submission. The arrangement can remain confidential if needed, and cost savings are achieved by outsourcing credit control.

Professionals and businesses in services such as architecture, engineering, legal services, and the financial sector stand to benefit from invoice discounting and factoring.

 

Recruitment factoring and discounting

The persistent challenge of the time gap between paying staff and receiving payment for recruitment services has plagued the industry. Operating on a precarious edge, gaining control over cash flow for future growth seems nearly impossible.

Enter invoice factoring and discounting, proving invaluable in this scenario. Upon invoicing clients, a substantial sum—typically 80% to 90% of the total invoice—is swiftly released by the lender. Suddenly, meeting weekly payroll obligations becomes effortless, allowing you to focus on securing more work.

Specialised lenders for the recruitment sector can tailor packages to suit your business. With confidential finance available, your clients need not even be aware of the arrangement.

 

Invoice funding for security firms

Invoice finance is a way to uphold a positive business reputation in the security industry and provide greater job security for your employees. Payments are released as you issue invoices, with the only limitation on available funds being the volume of work you undertake.

It’s a form of borrowing that expands with your business growth. Unlike traditional bank lending, there’s no need for intricate paperwork, and a top-tier credit rating is not crucial.

This enables you to secure larger contracts and hire more skilled staff, assured that the funds will be available to fulfil your commitments.

 

Transport industry finance

In the transport sector, varying expenses such as fuel, wages, and vehicle maintenance can lead to significant cash flow challenges. Funding requirements may be intermittent or continuous, depending on the nature of the jobs you undertake. However, this form of finance helps stabilise your cash flow each month, offering crucial flexibility for future planning.

Transport industry finance can be kept confidential from your customers if required, with customised solutions catering to every business. Whether integrated into a long-term growth strategy or employed as a temporary measure during cash flow constraints, it provides a valuable tool for managing financial stability.

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Wholesale and distribution factoring

Extended credit terms are a common aspect of the wholesale industry. If your company is grappling with cash flow issues, consider a tailored factoring solution.

For wholesale and distribution firms, invoice factoring involves ‘selling’ the outstanding debt in your sales ledger. This proves especially beneficial when waiting for payments that stretch up to 120 days, injecting vitality into your business and opening up new opportunities.

Customised factoring solutions for export and import companies ensure that your specific needs and objectives are addressed. It’s a flexible, efficient, and easily arranged financial option.

Vanguard Insolvency can connect you with reliable lenders and provide independent advice on the most suitable type of invoice finance for your business.

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.