Invoice financing can help prevent what common business issue?

Invoice financing is a financial solution that allows businesses to borrow money against their outstanding invoices. By doing so, it effectively helps businesses address cash flow shortages that may arise due to slow payments from customers. When a company issues invoices to clients, it often waits a considerable time to receive payment, which can create a gap in available cash for operational expenses, payroll, and other necessary expenditures.

Utilizing invoice financing provides immediate access to a portion of the invoiced amounts, allowing businesses to maintain liquidity and continue operations without interruption. This proactive approach helps to stabilize cash flow and ensures that the company can meet its financial obligations timely, ultimately preventing cash flow-related issues that could hinder its operations.

In contrast, the other options relate to different operational challenges that invoice financing does not directly address, such as managing inventory levels or market competitiveness. Therefore, focusing on cash flow shortages effectively highlights the primary benefit of invoice financing.