Invoice finance

[edit] Introduction

Invoice finance is a means of receiving early payment on invoices to improve cash-flow.

One of the key issues facing contractors and sub-contractors in the construction industry has always been that of late payment. Invoice finance is a product (or group of products) aimed at improving cash-flow for businesses who issue 30/60/90-day invoices to other businesses.

How it works:

• Once a facility is in place, the standard invoice is sent to the customer as usual.
• A copy of the invoice is sent to the finance provider who will pay a pre-arranged percentage of the invoice amount within 24 hours. The amount paid is usually between 80% and 100% of the invoice total.
• The invoice finance company will chase the customer for payment and when paid, the balance (less any fees) is sent on to the seller.

The standard process is 'factoring' - where the customer is made aware that the finance company is chasing for payment. In confidential invoice discounting, the customer is unaware that the finance company is chasing for payment.

[edit] Related articles on Designing Buildings Wiki

• Buyer-funded development.
• Cash flow.
• Construction loan.
• Construction project funding.
• Cost plans.
• Discounted cash flow.
• Equity and loan capital.
• Equity in property.
• Funding options.
• Funding prospectus.
• Leaseback.
• Mezzanine finance.
• Project-based funding.
• Real Estate Investment Trusts.
• Reverse premium.