The 8-Step Guide to Preparing Your Small Business for Invoice Finance

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For small business owners, mastering cash flow can feel like taming a wild beast. However, there’s a powerful tool at your disposal: invoice finance. It’s the key to unlocking capital and expanding your business horizons. If you’re ready to explore this financial avenue, our comprehensive 8-step guide is your roadmap to success.

Step 1: Evaluate Your Business Needs

Before you dive into invoice finance, take a moment to assess if it aligns with your business’s unique requirements. Consider your cash flow cycles, credit history, and outstanding invoices. If you’re dealing with extended payment terms or navigating cash flow gaps, invoice finance might be your knight in shining armour.

Step 2: Research Providers

Not all invoice finance providers are created equal. Embark on a journey of comparison, scrutinizing fees, terms, and reviews. There are two primary flavours of invoice finance: factoring and discounting. Choose the flavour that suits your business needs best and partner with a reputable provider who knows your industry’s ins and outs.

Step 3: Understand the Process

Knowledge is power. Familiarise yourself with the application process, funding stages, and repayment terms, including all the associated fees. This upfront understanding shields you from surprises and ensures crystal-clear expectations. During the application, you’ll need to provide financial statements and business details.

Step 4: Review Your Invoices

Identify the invoices you wish to finance based on criteria like their age, payment terms, and customer creditworthiness. This step defines your funding requirements while ensuring you’re not financing invoices that might go unpaid.

Step 5: Organise Your Financial Records

Identify the invoices you wish to finance based on criteria like their age, payment terms, and customer creditworthiness. This step defines your funding requirements while ensuring you’re not financing invoices that might go unpaid.

Step 6: Communicate with Your Customers

Transparency is key. Educate your customers about invoice finance to prevent any confusion or misunderstandings regarding payments. Assure them that your goal is to bolster cash flow without altering their payment terms or your business relationship.

Step 7: Create a Budget

Financial preparedness is your ally. Craft a budget that factors in the costs linked to invoice finance, such as fees and interest rates. Be aware that some providers charge for services like credit checks and invoice processing. This foresight enables effective cash flow management and informed financing decisions.

Step 8: Secure Your Funding

With your provider chosen, the application process completed, and necessary documentation submitted, you’re on the brink of securing your funding. Once it’s in your hands, practice diligent cash flow management and ensure prompt repayments to foster a strong relationship with your provider.

By following these eight steps, you’re equipped to prepare your small business for the remarkable journey of invoice finance, enhancing cash flow and fuelling growth. At Apollo, we’re dedicated to aiding small businesses in their pursuit of funding. Contact us today to explore our invoice finance solutions and embark on your path to financial success.

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About Us

Apollo Business Finance is one of the UK’s fastest-growing independent invoice finance lender. We provide businesses of all shapes and sizes with the cash flow support they need to grow, regardless of credit history or past hurdles.

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