The invoice finance industry is a jargon jungle. But don’t let that put you off. This month, John Wilde, Sales & Marketing Director of SME Invoice Finance tells Start Your Business Magazine about a new guide for small businesses. Here are just some of the terms he has defined below for the benefit of the SME business:
Advance rate. The agreed percentage of eligible debts, which will be made available for you to draw down.
Cash Flow. The measurement of cash that your company gains or loses during an accounting period; perhaps one of your most important management tools.
Confidential Invoice Discounting. An invoice finance facility where funds are advanced to a business by a lender (discounter) secured against the value of the business sales ledger and where the funding relationship is confidential (i.e. not disclosed to your customers) with complete responsibility and control of the sales ledger management, credit control and collection functions remaining within the business.
Factoring. A method of providing accelerated cash flow to a business using the sales ledger (receivables) as security to borrow money and where the lender also provides a full sales ledger management, credit control and collections service.
Working Capital. Current assets less current liabilities, representing the investment required to finance stock, debtors, and work in progress.
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