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Invoice Discounting Eligibility: Is It For Me?

Invoice discounting process is simple and straightforward. Appended below is a high level checklist to guide SMEs when considering invoice discounting eligibility:

  • SME must have offered credit terms to the customer. These terms must be clearly stated on the invoice itself. Cash payments are not acceptable for invoice discounting
  • Where applicable, sales contract and payments scheduled must be written and endorsed by both parties (SME and the customer)
  • A Purchase/Delivery Order has been raised by the customer
  • SME has fulfilled its obligation to provide the stated Service or Goods
  • Invoice has been raised and accepted by the customer, but the payment is still outstanding (i.e. pending payment from the customer)


Invoice Discounting Eligibility: Selecting the Invoice Finance Company

Once you are sure that you are qualified for Invoice Discounting and want to go ahead, you will need to identify and select a suitable Invoice Discounting Company. A few tips to keep in mind on how to select the right invoice discounting firm.

  • Not all invoices are accepted by the Invoice discounting firm.  The firms internal policy may bar certain companies that does not meet its minimum requirements or it could be due to the end customer (debtor) risk profile.  Check with the various invoice financing company as their risk appetite may be varied from one to another
  • Do you require whole turnover invoice discounting facility or just some selected invoices? Again, not all invoice financing firms offer both forms.
  • Do you have any preference in terms of payment structure?   Usually, invoice financing company require either:

–  Opening a joint account / virtual account to enable the Financier access and control over invoice repayment from the customer. It is to be noted that, the name of this joint account will remain under the SMEs to provide confidentiality of the arrangement

–  Some Financier may only choose to have access to the SMEs bank statements just to monitor incoming payments and be prompted when the relevant payment has been deposited.

  • How fast do you need the money? The speed in which the Financier can release funds can vary from one day to several weeks. Check out their on-boarding requirement.  Depending on your urgency/need pick the appropriate Financier

Contact us if you are interested to find out more details on Invoice Discounting and your SME’s invoice discounting eligibility.

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