What is Invoice Finance?

If you are new to invoice finance, here is a quick explanation of what invoice finance is and how it works.

Invoice financing is a form of short-term borrowing in which your business borrows money against the amount due on invoices you’ve issued to your customers. These trade receivables are then used as collateral.

Invoice financing is used regularly in a wide range of sectors and industries, such as construction, retail, transportation, and consumer goods.

If a significant amount of your company’s assets is locked up in receivables, and if those receivables make up a very high percentage of your current assets (perhaps because of overly lengthy payment terms), invoice financing could help you avoid working capital issues. This can make invoice financing for small businesses an attractive option.