When your business faces financial challenges, both cashflow loans and invoice financing can offer effective solutions. Understanding their differences will help you make an informed decision.
What is a Cashflow Loan?
Cashflow loans are short-term loans designed to provide immediate financial relief. They are particularly useful for businesses that need funds quickly for operational expenses.
Best For:
Covering payroll, inventory, rent, or other general expenses.
How it Works:
You borrow a fixed amount and repay it in instalments, often with a fixed interest rate.
Key Benefits:
Flexible usage, no collateral required, and fast approvals.
What is Invoice Financing?
Invoice financing, also known as accounts receivable financing, allows you to borrow against your unpaid invoices. This solution is ideal for businesses experiencing delayed payments from clients.
Best For:
Companies heavily reliant on receivables to maintain cashflow.
How it Works:
A lender advances you a portion of your invoice’s value, and you repay once your client settles the invoice.
Key Benefits:
Access funds tied up in invoices without taking on new debt.
How to Choose Between the Two
Invoice financing, also known as accounts receivable financing, allows you to borrow against your unpaid invoices. This solution is ideal for businesses experiencing delayed payments from clients.
Your Business Model:
If you have delayed receivables, invoice financing is more suitable. For broader needs, a cashflow loan is ideal.
Costs:
Compare fees, interest rates, and repayment terms to determine the most cost-effective option.
Access Our Tool:
Use our comparison tool to evaluate both options side by side and find the right fit for your business.