For a business waiting 30, 60 or more days for customers to pay, that distinction matters. Previous missed payments or a difficult trading period may still be reviewed, but providers can also look at the strength of the business, its debtor book and the likelihood that outstanding invoices will be paid.
First identify where the cash flow gap comes from
Not every invoice-related cash-flow problem calls for the same type of finance. A business waiting for customers to settle completed work faces a different problem from one that needs to pay a supplier before receiving money from its own customers.
Before choosing invoice factoring or another invoice-based funding route, a business should identify which side of the payment cycle is creating the pressure. Factoring releases cash against unpaid customer invoices, while supplier invoice funding addresses bills the business itself needs to pay before enough customer cash has arrived.
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