The benefits from the lenders' perspective are clear - they get to spread their risk of loan default around your customer base rather than with your company alone. The benefits to your business centre around the flexibility provided - you get access to a flexible source of funding that grows with your business and you pay only for what you use.

The resurgence of invoice finance has seen many new entrants to the market and also an increase in the range of products available, with many providers looking to provide bespoke solutions targeted specifically at the SME market.

Understanding what you need
Before considering invoice finance you need to understand what you are looking to achieve. How much finance do I need for my business? Do I want to manage my own credit control? Do I want my customers to know a finance provider is involved? Do I want to insure my debts?

Decide what you want before looking for a provider to meet your need. Invoice finance comes in many forms - full service factoring; confidential invoice discounting; trade finance; recourse and non-recourse - so understanding the different products is crucial. You can download a helpful fact sheet by clicking here [1].

Researching the market
Rather like car insurance, there are a huge number of providers available to provide you with invoice finance. We all shop around to get the best car or home insurance quote, and invoice finance is no different. Rarely is the deal offered by your bank the most competitive.

If you are new to invoice finance or looking to get a better deal then there are a number of independent firms, not owned by a finance provider, who will give impartial expert advice, often for free, to help you establish what you want and then ensure you get the deal that is right for your business.

Know what you are getting
The cheapest quote is rarely the best - you get what you pay for. We often come across businesses who have taken the cheapest full service factoring quote, only to find that the invoice finance provider has poor quality credit control and your customers are taking longer to pay than before.

Longer payment time means that you pay for finance over a longer period and, if the provider has not been successful in getting payment after 90 days, they take the finance for that invoice back from you - effectively they get rewarded for poor performance.
Again getting independent advice is crucial. Talk to an expert who knows the market and the strongest providers within it. It will be time well spent.

For more information visit www.optimarm.com/OurServicesIS.aspx [2]