Invoice Factoring (Financing) has been supporting businesses all over the world for hundreds of years. It applies a simple concept where businesses can obtain funds upfront by selling their outstanding customer invoices to a financier for a small fee. So, is Invoice Factoring suitable for your business? Let us explore.
Benefits of Invoice Factoring for Your Business
Full Flexibility for Early Customer Payments
Ability to obtain funding without adding debt to your balance sheet is always a bonus. Invoice Factoring is purely a conversion of your current asset (i.e. trade receivables) into immediate cash. Rather than waiting for your outstanding customer invoices to be paid in 30, 60 or even 90 days, you will receive payment earlier to help fund your business growth. Most financiers will allow you to flexibly drawdown funds as and when required.
Leverage Your Customers’ Credit Worthiness for Lower Pricing
To obtain external funding, financiers would normally assess credit worthiness based on your business. In contrast, Invoice Factoring takes your customers’ credit worthiness into consideration. This is because repayment of the finance comes from your customer rather than from your business. Therefore, if you are selling goods to an multinational corporation (MNC), government agency or perhaps a listed company, it is very likely that the interest rate you pay will be better than obtaining a business loan.
No Paperwork
With InvoiceInterchange, you can say goodbye to long tedious paperwork that you may have experienced with other traditional financiers. We offer an end-to-end online platform that is simple from onboarding, draw downs and settlement. Finance that is made easy for your business – freeing up your time and resources.
How Does It Work?
With InvoiceInterchange, it is so simple. After you are onboarded, simply submit invoices you want to finance via our online platform. Once verified, we will transfer funds (up to 80% of your invoice amount minus a small transaction fee) to your designated bank account within 24 hours.
When we receive payment from your customer, we will settle the outstanding finance and disburse the remainder minus interest. That is really it!
Product Variation
One point to note, there are several variations to Invoice Factoring (Financing). There are three main products depending on your business needs:
Spot factoring / Selective invoice discounting – only sell invoices as and when you need to. This option offers your business full flexibility in terms of when to draw down against your customer invoices – helping you take control of cash-flow. This product is suitable for project invoices or business with seasonal sales.
Contract financing – Are you providing services to and receiving regular (e.g. weekly, monthly, quarterly) payments from your customer? With contract financing, you can bring forward up to 6 months revenue in advance. This allows you to free up cash flow to grow your business.
Whole ledger factoring – If your business has a regular cash flow requirement, whole ledger factoring will be the most suitable product for you. It offers the highest credit limit and lowest price amongst the three products.
Speak to one of our team members today and see how we can support your business cash flow needs.
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