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.
Featured articles
Check out some of the best features and news from Designing Buildings as well as key stories from around the web.
CIOB photography competition is open for entries.
ECA Edmundson apprentice of the year award
Finalists announced.
Major new study exposes serious knowledge gaps.
Generating energy from internal light as well as sunshine.
ECA welcomes plans to strengthen subcontractor quality control.
Combining mid-career qualifications with experience broadens career opportunities.
Why being a mentor can help your career.
Channel 4 broadcaster to host 125th anniversary ceremony.
Listed structures on the rail network
Heritage interests and operational requirements must be balanced.
Historic England publishes research into embodied carbon when retrofitting traditional buildings.
New Prime Minister delivers on ECA call for cut in electricity costs.
CIOB reacts to the announcement of Andy Burnham as Prime Minister.