Invoice factoring is a type of invoice finance and lets small businesses obtain a loan against the value of unpaid invoices. This cash injection can then be used to help business growth by encouraging further investment in the production of goods and services for new sales, or to take advantage of attractive new business opportunities.
Similar to invoice finance and debtor finance, invoice factoring is a form of short-term borrowing that allows a business to turn outstanding invoices into a guaranteed cash-flow that can be subsequently used to fund business growth.
The main difference between invoice factoring and invoice and debtor finance is that the factoring provider assumes responsibility for the management and collection of the business’s accounts receivables ledger. While outsourcing the accounts receivables function sounds great, it’s worth considering additional factors such as:
Most traditional invoice factoring businesses don’t connect to cloud-based accounting software providers such as Xero, MYOB and Quickbooks which are all used widely throughout the industry. As a result of this technological incompatibility, invoice details and accounts receivables ledgers may need to be manually uploaded to the factoring lender in a process that is error-prone and inefficient. The manual process also can make reconciliation with your business’s accounting a cumbersome process compared with modern invoice finance systems.
Skippr Invoice Finance offers a modern invoice finance service and does not offer traditional full service invoice factoring. We have found that most borrowers wish to maintain their client relationships and developments in technology and cloud accounting software makes managing their own accounts receivable easier than ever.
Skippr customers benefit from:
Find out more about Skippr’s invoice finance service here or contact us to to see how we can help your business grow.