Accessing capital tied up in unpaid invoices is a common challenge for many businesses. Invoice financing offers a way to turn receivables into usable cash, enabling smoother operations and supporting growth without waiting for payment terms to elapse.
How the Invoice Financing Process Works
With invoice financing, your business sells outstanding invoices to a finance provider who advances a portion of the invoice value upfront—typically between 60 and 90 percent. Once your customer pays the invoice, the finance provider releases the remaining balance, minus a service fee.
There are two primary types: invoice factoring and invoice discounting. With factoring, the finance company often takes over collection duties, while discounting keeps collections in-house and maintains customer contact under your brand. The right structure depends on your internal resources, types of debtors, the health of your debtor book and yourdesired visibility to your clients.
Why Companies Turn to Invoice Finance
Invoice financing provides a bridge between billing and payment receipt. This is especially useful for businesses in B2B industries where payment terms extend 30, 60, or even 90+ days.
It helps:
- Smooth cash flow
- Fund business growth or capitalise on new opportunities
- Avoid delayed supplier payments
- Maintain payroll and other fixed expense coverage
It’s particularly useful for businesses experiencing seasonal fluctuations, rapid growth, or operating on thin working capital margins where traditional working capital funding might be too slow or difficult to unlock
Invoice Financing vs. Other Working Capital Solutions
Compared to traditional overdrafts or short-term loans, invoice financing is more directly tied to your receivables rather then stock. It’s also scalable with your revenue—more invoices mean more potential funding, which creates flexibility during periods of expansion.
However, it’s important to weigh the costs and consider the impact on customer relationships, especially if the lender assumes the collections process. Evercrest provides guidance on choosing providers who value discretion and align with your business ethos.
How Evercrest Assists
At Evercrest, we go beyond matching you with a finance provider. We evaluate your entire working capital cycle to determine whether invoice financing is the optimal tool—and if so, how to best structure it.
From selecting between factoring and discounting, to negotiating advance rates and terms, we work in partnership with you to create a facility that supports liquidity while preserving trust with your customers. Our approach ensures that working capital solutions fit into your broader capital strategy, not just your immediate needs.
Visit our Business Solutions page to learn more, or book a call with us directly [WhatsApp]
