Cashflow solutions to accelerate payment on invoices

February 5, 2024

How to accelerate payment on invoices

In the exciting yet frenetic world of small business, cashflow management can feel like walking a tightrope. One delayed or failed invoice payment, and your steady progress can start to falter.

Even when invoices are paid on time, ‘on time’ can mean anything from 30 to 120 days after the invoice is issued.

These delays not only stifle the agility and growth potential of your business, but they can make day-to-day operations  more difficult than needed.

In this blog, we explore how invoice financing is emerging as a crucial lifeline for small businesses like yours – and how faster access to your cash can provide a level of liquidity previously only enjoyed by bigger organizations.

The pain of waiting on invoice payment

Delayed invoice payments are more than an inconvenience; they can represent a major hurdle on your roadmap to success.

When customers take longer to pay, it disrupts the vital flow of cash on which daily operations and strategic growth depend. These delays can lead to missed opportunities – whether it's hiring new talent, launching a marketing campaign, or expanding product lines.

Beyond the financial strain, there's an emotional toll as well. As business owners grapple with financial uncertainty and the administrative burden of chasing payments, the joy of running a small business can soon turn to misery.

The basics of invoice financing

Invoice financing is a financial lifeline, enabling you to convert unpaid invoices into immediate working capital.

The process involves selling an invoice (or group of invoices) to a third party (a financier) at a small discount. In exchange, the bulk of the invoice value is deposited into your business account within hours.

The financier assumes responsibility for collecting payment of the original invoice. In the event an invoice isn’t paid for whatever reason, it is the financier that absorbs the cost, not you.

Accelerating payments with invoice financing

The primary advantage of invoice financing is the rapid liquidity it provides. Instead of waiting between 30 and 120 days for invoice payments, you get access to around 90% of the invoice value within 48 hours.

This change can be transformational for businesses, particularly those that manage seasonal demand or are experiencing rapid growth.

Invoice financing can also ensure more stable and predictable cashflow. For example, a tech startup could leverage invoice financing to fund a critical development phase, or a manufacturing company might use it to mitigate seasonal cashflow dips. Indeed, the practical uses and benefits are virtually limitless.

As well as accelerating payments, invoice financing can be used to widen your customer base. Say you have a potential customer who is in a position to send you a lot of business. If the customer insists on 90- or 120-day payment terms, it could represent a delay that is too lengthy if you’re a small business with a precarious cashflow, meaning you’d have no choice but to turn down the offer of work.

By using invoice financing, such payment terms become irrelevant. No matter how long a customer's payment terms are, you'll get around 90% of invoice value within a couple of days. In other words, payment terms are no longer an obstacle.

As many businesses prefer longer payment terms, your ability to accept them gives you a competitive advantage and significant scope for growth.

Choosing the right invoice financing solution

The right invoice financing solution for your business requires careful consideration.

Key factors include the cost of the service, the terms of the agreement, and the provider's reputation within the industry.

It's also advisable to compare it against other financing options, like bank loans or lines of credit. Doing so will more than likely help you to appreciate the scale of flexibility invoice financing offers and how – unlike other financing options – it never requires you to put any of your assets on the table as collateral.

More than just speed

Invoice financing offers the safest, most practical, and most flexible solution to one of the most pressing challenges faced by small businesses – slow invoice payments.

By transforming unpaid invoices into immediate working capital, you’re empowered to maintain steady growth and financial health.

If your business is grappling with cashflow challenges due to delayed invoice payments, invoice financing could be the strategic step forward that you’ve been looking for.

Invoice financing with Stenn

Stenn specializes in providing invoice financing services to small and medium-sized businesses engaged in international trade and working with delayed payment terms.

Turn your unpaid invoices into liquid capital now. Alternatively, learn more about the other financing options available to your business in our Resources Hub.

Since 2016, Stenn has powered over $15 billion in financed assets, supported by trusted partners, including Citi Bank, Goldman Sachs, HSBC, and Natixis. Our team of experts specializes in generating agile, tailored financing solutions that help you do business on your terms.