How to free up working capital with invoice financing

Have you got big ideas for your business, but don’t know if you can fully afford them? Maybe you’d like to buy more inventory, create new product lines, or reach out to new markets. None of that will be possible if you don’t have the working capital you need to turn your dreams into reality. There are plenty of ways to access finance that will shore up working capital. The problem is, most traditional banks charge high rates in return for backing your business. With Stenn that’s not the case. We tailor our technology-driven invoice financing solutions to the individual goals of each business owner we support. And that could just be the injection of working capital you need right now.

What is working capital and how can you calculate it?

Working capital is a measure of a company’s liquidity. If you don’t know your current level of working capital, going for growth is tricky. Like navigating through a midnight rainstorm without windshield wipers or headlights.

The good news is, calculating working capital is easy: simply subtract your business’s current liabilities - what you owe - from your financial assets. In other words what you are owed and what you own.

The result is a snapshot of the health of your organization. If the figure shows you have positive working capital, that means you can afford to pay your debts and invest in your company’s growth without worry. On the other hand, negative working capital reveals your business may be struggling.

And that means it’s time to consider how to bolster your finances - with invoice financing among the main ways to free up working capital.

How invoice financing works

Use invoice finance with Stenn and you’ll get invoices paid when you need the money. It’s an instant boost for your organization’s working capital. Best of all, we take payment directly from your customer. It solves the hassle of chasing payment yourself while also solving the stress of cash flow issues.

So what is it?

Invoice financing is a way to get invoices paid just when you need the money. Your invoice financing provider takes payment directly from your customer. This solves the hassle of chasing payment yourself while also making the stress of cash flow a thing of the past.

Unlike traditional loans that may take weeks or months to secure, it offers a quick solution to convert unpaid invoices into readily available cash. That immediacy can be crucial, allowing you to access the cash trapped in invoices in as little as 48 hours, so you can maintain day-to-day operations and seize growth opportunities that require urgent funding.

What invoice financing can do for working capital

Plus points when you tap into invoice financing include:

• Quick access to cash 
• Zero risk to your assets
• No more chasing payments
• Reduction in late payment

Simply by the way it works, invoice financing frees up working capital. And that brings many benefits of its own.

Forge ahead when you free up working capital

The more working capital that you free up, the more money you have available to invest in your business. So, if you have an idea for physical expansion, new revenue streams, or you’d like to invest in more inventory or employees - that could be great news for your business.

It’s also essential to the relationships you build. With working capital in place you can pay your suppliers on time, strengthening bonds and even securing better terms in the process. 

1. Working capital for growth

• Innovate - Launch a new product.
• Multiply - Useful if you’ve identified new locations where you think your business could succeed.
• Expand - Turbocharge your ability to hire staff and secure the best talent to support your growing business.
• Harness - Gear up for seasonal surges like Christmas or Black Friday.
  

2. Working capital for stability

• Requirements - Maintain smooth operations by meeting immediate financial obligations.
• Relationships - Strengthen bonds with suppliers through timely payment.
• Relax - Reduce the stress of managing cash flow gaps with greater liquidity.

How to choose an invoice financing partner

It should now be pretty clear why growth-oriented businesses tap into invoice financing. Get working capital right and growth can be just around the corner.

So, how can you find the right invoice financing partner to suit your needs?

Closely consider:

• Whether the finance company is prepared to finance businesses engaged in international trade
• How many countries the finance company can operate in
• The simplicity of the approval process. Look for a finance company that uses automation technology to ensure the process is fast and requires little documentation
• Whether the finance company will force you to repay your finance if the buyer defaults
• The costs associated with financing fees
• How long it takes for the finance company to finance invoices – some will deposit funds within hours, others after weeks (or even months)
• How much of the invoice is advanced. Where some will advance at least 90% of invoice face value, others typically advance 70-80%.

Apply for invoice financing

Once you’ve found the partner you think is a good fit it’s time to apply for invoice financing. Here’s a speedy summary of how the process works:

1. Having chosen a finance company you trust and one that major players also trust in the finance world, you'll create an account on their website.
2. With your account live, you’ll be asked to enter your buyer’s name to assess the financing limit;
3. Next, you’ll upload the invoice that needs to be financed on the platform, together with any shipping document(s), such as a Bill of Lading, Air waybill, CMR documents or CMR consignment note (a document used for the regulation of road freight transport, and serves as an international agreement).‍
4. At this point, the provider will decide whether or not to approve the invoice and shipping documents.‍
5. Assuming your invoice and shipping documents are approved, you will be sent two documents – an Agreement from the provider and a Notice of Assignment for the buyer.
6. You sign the Agreement, and both you and the buyer sign the Notice of Assignment.
7. Within days, up to 90% of the invoice’s face value minus any pre-paid amount is paid directly into your bank account. The remaining 10% is held in reserve to cover the provider’s fees and potential offsets or late payment charges.
8. On the invoice's due date, the buyer pays the invoice to your finance company, who in turn pays you the outstanding money owed minus the provider’s fees.

Why Stenn leads the way in invoice financing

Here at Stenn, we pride ourselves on providing hassle-free financing solutions. We share your ambitions: we love to see our customers succeed.

Unlike traditional players we’re invested in your success. We want your working capital to work harder, and we’re on a mission to make that happen as simply as possible. Supporting you needs so you reach your goals.

Here’s how Stenn stacks up to the competition:

• Fast approval processes - Our quicker and more efficient approval processes ensure you can access funds without delays.
• Competitive rates - We offer competitive financing rates, providing cost-effective funding to businesses of all sizes.
• Global reach - Our global presence ensures you can access financing wherever you are so you can drive your international growth and expansion ambitions.

Make working capital work for you

Worried about having enough working capital to invest in the future growth of your business? Invoice financing is the solution you’re seeking, great for both stability and expansion.

Giving you instant access to cash with minimal fuss, invoice financing puts working capital on a positive footing - so you can start that new revenue stream, strike out to new locations, staff up, and more.

To discover more about Stenn’s expertise in invoice financing, read our in-depth guide.

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