Chinonye is a successful cosmetics businesswoman. She produces and supplies skincare products to different stores nationwide on a large scale. Her business is her best friend, and she does everything possible to keep it running.
Chinonye supplies different cosmetics products to stores, providing them with an invoice to pay in 30 days while she continues her business. She faces challenges of late invoice payment many times but still manages to keep her business running; the road to business success can be challenging, Chinonye understands.
In 2020, Chinonye faced a big challenge with her business. COVID-19 affected the importation of the raw materials Chinonye needed to produce her cosmetics. There was a total lockdown, she couldn’t produce much, and her supplies went low simultaneously. In a little time, she was already recording losses.
After the lockdown, Chinonye had to revive her business. She needed capital to keep her business running. She wanted to avoid taking a loan because she had had a bad experience with a loan company. She knows she should be able to gather enough from the funds she’s expecting from her clients only if they pay their invoices on time. She tried calling them to see if they could fast-track their payments so that she could get enough capital to fix her current business challenge, but all to no avail. Not until she was introduced to invoice financing by one of her colleagues at the university, Aisha, who runs a similar business.
Chinonye was lucky to discover what she would describe as the best invoice financing service provider and got out of her financial crisis. This article will tell you more about invoice financing and how it was the best solution for Chinonye’s business challenge. It will also guide you in selecting the right invoice financing service provider.
Understanding Invoice Financing.
A 2020 PwC survey on MSMEs revealed that nearly 50% of business owners complained about delays in payment for goods delivered and services rendered to public sector clients/well-established SMEs and large corporates. Though 43% of this percentage claim the delays did not last for more than 30 days, 33% reveal that it still severely impacts their cash flow and revenues. Delays in invoice payment are now proven to be a factor that affects a business’s cash flow, and invoice financing is a solution many business owners seek in times like that.
Invoice financing is a financial solution for business owners whereby an invoice financing service provider pays an unpaid invoice issued by the business owners to their customers ahead of the scheduled date for payment. You don’t have to wait for your clients to pay the invoices you presented before accessing, usually 80% of the total amount on the invoice. This way, you can access the capital you need to attend to other business activities to ensure the smooth running of your business operations.
How to choose the right invoice financing provider for your business.
There are many invoice financing service providers available. As a business owner, you need to know which service provider offers the service that fits your business best. With these few points below, you should have a guide to help you select the best invoice financing service provider for your business.
- Does the invoice financing service provider guarantee flexibility?
All businesses cannot be the same. Many invoice financing service providers are out there, but that doesn’t make them a good fit for every business. When selecting an invoice financing service provider, you need to look critically at your business, comparing it with the services offered by the service provider you are considering. Some invoice financing service providers come with other financing services that will benefit your company if implemented; you should check that out too.
- How much do they charge for their service?
As much as invoice financing is a go-to solution for businesses with cash-flow challenges. Business owners must be careful in choosing an invoice financing service provider. You have to consider the cost of using their service. How much do they deduct as charges for funding your invoices? You can continue with the service provider if you are okay with their charges.
- What do you have to say about their reputation?
Before selecting a service provider for your invoice financing, you must ensure the company is reputable. You do not want to fall into the hands of fraud or organizations with a shaky foundation. You should do background checks on any invoice financing service provider you want to subscribe to their service.
Invoice financing has proven to be a solution for businesses to help them with their cash flow problem. But every business owner must be careful in choosing an invoice service provider. Earnipay’s invoice financing product offers up to 80% of funds of invoices not older than 90 days for an agreed processing fee. With top security and confidentiality guaranteed, with Earnipay, you can access the required capital to keep your business running. Head on to earnipay.com to get started.