Managing one’s finances is hard enough if you are running a household – but if you are running your own business, managing your finances and making sure you have enough cash is a different matter altogether. For one, you have to ensure that your suppliers are all paid on time. Dealing with late payments can result in more loss for your business, especially if you have to pay late interest charges. Aside from this, regularly making late payments can also affect your relationship with your suppliers and other entities.
If you have been having difficulties with your cash flow, then you may want to consider an alternative solution. Invoice financing has benefited plenty of businesses in the UK, especially small and medium-sized enterprises. Additionally, you have the advantage of choosing from a wide range of invoice financing partners. But when choosing the right invoice financing partner for your business, you cannot just settle for the first one you see. There are some aspects you have to make sure of before going into an invoice financing arrangement. With that being said, following are a few key questions to ask yourself (and your prospective financier) when it comes to invoice financing:
How do they operate, and what is their procedure for invoice financing?
You need to find out how the financier operates before you decide to go into an invoice financing arrangement with them. This would include finding out the percentage of your invoices they can offer you. Some financiers offer 80 percent of the value of your unpaid invoices, whilst some offer a higher percentage. But apart from this, you also need to determine the financier’s procedure when it comes to collecting repayments and if they will charge you for early repayments and the like. When you determine their procedures and processes in detail, then it will be easier for you to decide whether their service is right for your needs.
Do you have an immediate rapport with the financier?
One thing that we sometimes overlook when it comes to financing arrangements is how we feel with the financier – meaning, do we feel that they understand our business and our situation, and are they sincere in their services? You need to have a firm yet friendly rapport with your financier, especially since you will be in regular contact with them. It is important for you to understand each other and agree on key issues before you agree to enlist their services.
In addition to a firm yet friendly (and immediate) rapport, you should also find out if the financier has had dealings with other businesses in the same industry as yours. If they have dealt with other enterprises in the same industry in the past, then it gives them an advantage as they are more likely to understand where you are coming from and what it is you need.
How will the financier communicate with your own customers?
If you have a factoring agreement where your customers will be contacted by the financier for collecting payments, then you need to know how the financier plans to communicate with your clients. Furthermore, you and your financier need to agree on a general policy regarding proper customer service so your customers will not be offended or even alienated when collection time comes.
At the end of the day, an invoice financing arrangement, such as one you could acquire from www.ashleyfinance.co.uk, could benefit your business in more ways than one – as long as you ask the right questions and understand all the details.