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Selective Invoice Discounting as an alternative funding solution

Michael Naidoo

From time to time, small and medium-sized businesses are strapped for cash as their funds are often locked in invoices that have not yet been paid. This is one of many reasons businesses should consider using Selective Invoice Discounting to release funds and improve cash flow. Selective Invoice Discounting can allow you to increase turnover, improve cash flow thus improving your total profitability.

Michael Naidoo, CEO of FNB Specialised Finance says, “Invoice discounting is a short-term finance solution that gives businesses access to cash while their invoices are yet to be paid. At any one point there may be multiple invoices that are pending or about to be paid. These invoices are access points to cash. Either one invoice or multiple invoices for selected quality debtors are ‘sold’ to release funds and improve cash flow.”

The facility can be used on multiple occasions to meet the  business’ working capital needs. Once an invoice is settled, the client will have no further obligations to the bank, but the facility remains available for  future use. This will be deployed on an invoice-by-invoice basis. Cash can be released within a maximum of 48 hours after completion of take-on process.

According to Naidoo there are alternative funding solutions such as overdrafts, loans or enterprise development funds and it’s up to the business owner to investigate all options thoroughly in order to make the right choice. He urge individuals to read the fine print and adds that invoice discounting is a short-term finance solution -  businesses should not become dependent on.

“If used correctly, Selective Invoice Discounting can be a funding solution that will help to accelerate the cash flow to businesses which need extra working capital to enable growth or to be able to take advantage of a current market opportunity," concludes Naidoo.