Invoice Factoring Calculator
When a business has too many outstanding invoices, the capital is locked up in receivables. Despite having good sales and turnovers, the business may face a liquidity crunch simply because the receivables have yet to flow in, where they can be used for various expenses. With invoice factoring, you can leverage these outstanding payments in the best possible way, preventing them from disrupting your business by reducing your liquidity. Invoice factoring is also known as accounts receivables financing because these loans are given on the basis of the receivables your business has.
They let you get access to the locked up capital without delay, on payment of a fee. You get the funds from an invoice financing company which uses the invoices as collateral. This means you can flow your capital back into business expenses, using the capital the most efficiently, irrespective of when your debtors make their payments to you. For a business plagued by sluggish debtors, invoice financing is an efficient loan option that offers a predictable inflow of cash.
Typically, invoice financing companies lend up to 85% of invoices used as collateral. Out of the balance, a portion goes to the lender as fees and the rest comes back to you when the invoice is actually paid by your customer.
Find out whether your business can make better use of capital by opting for invoice financing when your customers ask for extended credit periods or when your cash flow from other sources slows down. Use this calculator to find out how viable this option is for you.