When you are selling products or services to customers, invoices are raised detailing the items sold, their numbers, prices and total amounts due. There is quite often a time lag, between sending out these invoices and receiving payment against them. This problem gets compounded when customers demand credit terms. This problem of delay in receiving payment can be solved if you resort to invoice discounting Rotorua.
This process allows you to release funds from unpaid invoices, as soon as they are raised, and allows you to maintain a degree of control over the often arduous task of collecting payments. It acts as an alternative solution for raising finance that provides instant cash, sums that are often tied up with customers. Invoice discounting Rotorua is a method of finance that is much more flexible and easy to get, then a standard loan or overdraft.
You need to find a lender who will accept your invoices for discounting and sign an agreement detailing the fees that will be paid for this service. Most lenders will deposit 80 to 90 per cent of the invoice value directly into your firm’s bank account as soon as they receive the invoices. You can collect payment from the customer and continue any follow-up actions for settlement of dues from your customers. Once this payment is received you can repay the lender along with the agreed fees and charges.
Lenders who offer such invoice discounting Rotorua finance will require you to have proper credit control procedures to ensure that your customers make payments of the full amount on time. You will also be expected to have a minimum turnover that will give them enough business. They are more comfortable with lending money in this fashion to companies who have credit management processes that are effective. Discounting services are more easily available to businesses that are well established and have a reliable turnover and systems that monitor the credit that they offer their customers. For more assistance on this matter, you can easily contact Asset Factors and they can surely give you advise.
Most invoice discounting Rotorua is confidential and is rarely known to customers, but you can choose to disclose it by statements on each invoice that it has been assigned to a third party. “With recourse” financing of invoices allows the lender to claim back the money lent against the invoice if the customer fails to pay up. Discounting without recourse can be a bit more expensive as you are than required to take out a credit insurance policy.
This method of financing through invoices is beneficial to businesses operating in any kind of industry. What it gives the borrower is a reliable source of finance that can be used as working capital and is available continuously as long as you continue to supply and invoice your products or services. You are assured of a source of finance to pay your suppliers so that the inventory needed for continued production is never disrupted.
Financing through invoices allows for fast funding that allows you to unlock the cash that is tied up in outstanding invoices. This can then be reinvested in operations so that the cycle of production is never interrupted.