Single invoice finance is superior to committed invoice facilities
According to Begbies Traynor, a SME needs the following attributes before a bank will provide it with an ongoing facility that finances ALL of its sales ledger invoices:
Few disputed invoices
A good track record of obtaining payment
Low levels of bad debt
A good credit record for your customer base
The point is, the bank that provides the financing facility will look at ALL the SME's sales ledger and its historical performance.
Many SMEs cannot meet all these requirements, which is where single invoice finance becomes an attractive alternative source of finance.
Single invoice finance looks at just ONE invoice (hence its name) so (provided the customer (debtor) is a low credit risk), it is far easier and quicker to raise cash from one invoice.
Single invoice finance can provice an excellent solution to filling temporary cash crises. It is superior to conventional invoice discounting facilities offered by banks, because there no security is needed, there is no on-going commitment to selling further invoices and no fees are charged. As long as the credit status of the debtor is acceptable, the company selling the invoice can collect up to 95% of the value of the invoice within a few days of contact with ACF.
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