Access to finance is essential for SMEs because it allows them to expand, thrive and ultimately create jobs. Thankfully, various alternative funding options provide SMEs with a choice when it comes to overcoming financial complexities.
Overcoming financing complexities: How GapCap can help
Funding challenges. It’s something every small to medium enterprise (SME) will encounter at some point on their journey. At Trade Finance Global, we look to remove these challenges by helping businesses examine a range of funding options – from a traditional overdraft or bank loan to a more innovative crowdfunding or alternative finance provision. And now a recent partnership with GapCap promises another solution – selective invoice finance.
What are the obstacles facing business owners?
We are operating in an uncertain economy and, as a result, small businesses are becoming increasingly risk-averse when it comes to seeking the capital they need to grow.
But this reticence to seeking finance only compounds the problem. And this isn’t helped by a lack of understanding about just what sources of finance are available to SMEs, and the available methods that can help them access funds.
How does selective invoicing work?
GapCap offer selective invoice finance, which can help bridge the gap between when an invoice is raised and when you receive payment for it.
Provide the funder details of the customer and the invoice that your business is looking to fund.
Once invoices are validated by the funder (or perhaps checks are done on the end debtors), the funder advances the large majority (typically 85%) of the total invoice value.
When the end customer pays the invoices, the funder will send the remainder of the total invoice amount less fees and charges, typically around 15% of the value.
With no hidden fees, no minimum commitment and no termination fee, selective invoice finance allows business owners to pick and choose the invoices that they want funded – at a time when their company need the cash the most. And, unlike full-ledger factoring facilities, there is no contract tie-in, just pay-as-you-go finance that adheres to very simple day rate fees.
Selective Invoice Finance, Key Stats (10 = High, 0 = Low)
Our partnership with GapCap means we can now play a really important part in providing SMEs with predictable cashflow at a predictable price, and the facility is available to private limited companies that are registered in the UK.
In particular, selective invoice finance can help B2B companies who rely on their payment terms being honoured in order to maintain a healthy working capital by providing highly competitive market rates. Clients are charged a single fee for the exact number of days an invoice is out, rewarding early payment by the end debtor.
Find out more about Invoice Finance
For any business offering some form of extended credit to customers and clients such as invoices, invoice finance is a type of business finance which allows you sell your invoices up front or advance your entire debtor book to a funder, receiving a percentage of the total value of the invoices up front, and the remainder (less interest and fees) once payment has been done. There are several types of invoice finance – factoring and discounting, which have different use cases depending on what’s best for the business.
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