There are many benefits of using invoice discounting. It improves the cash flow and helps to collect the business capital easily.Here are some more benefits of this borrowing that will help you to manage finance for your small business in a better way.
If you use commercial overdrafts, then you have to give personal real estate as security. But this proper invoice financing is totally different from that, it does not need any real estate as security because invoice has its own value which secures the process, there is no risk of losing real estate. This thing helps the businessmen to take more risk in other sectors and reduces the risk of losing personal real estate.
Commercial overdraft takes lots of time to finish the process because there is lot of paper works to understand. But invoice financing does not take that time to process; actually it depends on the lender. If it has placed correctly it does not take more than 24 hours to flow the cash.
Commercial overdraft does not help business grow quickly because it is limited of its value by the security which is provided. If the market is not going well and prices are not rising, then it cannot help to access more fund. On the other hand this option of finance grows with the business; if your sale is growing then you can expect an increased fund quickly and this is the main things to grow up a business properly.
If the economy is not doing well and market is stagnant, then the real estate security suffers. You can also see another thing that many times property is used to secure the business and if you have divorced then you have to split that property. But invoice discount can increase the funding for business over time and helps the property to sell.
There is no need to mortgage your real estate as security in invoice discount, so you can use your property for other businesses.
If you file for approval for overdraft security, then they will check your business history. So, if you have started your business newly or do not have that growth over time there is chance of non-approval of that request. Invoice discount depends on the invoice as the business is doing well and increasing its sell and it does not have a long history period. Invoice discount is far more flexible than the commercial overdraft as it depends on the customer relationship and calculates the profit, loss and checks the balance sheet. It does not require that much paper work as overdraft.