Growth capital is private equity used when a business wants to expand its facility, buy equipment or enhance sales and marketing strategies. With an extra capital injection, many small businesses move from their stagnation. Sourcing growth capital is not an easy task, especially for small businesses. One of the best methods to source capital for the expansion of small businesses is invoice discounting.
Many businesses offer credit to their customers, especially those buying in large quantities. This causes tying up of funds that businesses could otherwise use for growth. Invoicing these transactions can help you acquire funds for the expansion of your business through cash advances from these invoices.
Benefits of invoice discounting as a source of growth capital
*Alternative to loans
Due to the limits and constraints that loans put for small businesses, it is challenging for them to grow. Invoice discounting has fewer formalities giving a platform for small businesses to source capital.
*Increased cash flow
Since growth capital is tied to working capital, businesses must have an immediate method to improve their cash flow. With the instant providence of cash that discount invoicing offers, it makes it very simple for small businesses to achieve those short term objectives, eventually leading to growth.
*Access to business advice
Information about how business processes are conducted to achieve growth is vital for small businesses. The invoice discounting finance lenders are endowed with the know-how on how to achieve business growth. Despite these institutions providing you with growth capital, they also advise you on how to use it.
In a case that your customers are unable to pay for your invoice, you are at least insured against it. Many lenders offer debt protection for a period that you select. If your customers are aware of this, they will most of the time comply with the repaying terms.
*Can be done online
The compatibility of invoice discounting to an online system is a significant advantage. With the highly demanding activities of your small business, you may lack time to look for an invoice discounting lender. You should, therefore, use a trusted lender with an online website to enjoy this.
*Grows as the business expand
If you invest the money you get from invoice discounting in expansion, your business will be in a position to offer more credits leading to a growth in your invoice discounting status.
If you want an easy and effective method to get you growth capital for your small business, you should consider invoice discounting. This method acknowledges that every big business starts from somewhere and hence it does not overwhelm you with complex processes and restrictions when you are beginning.