Invoice financing, or receivable financing, or factoring is a financing method where the company assign the outstanding customer invoices to the financier so that the financier has the rights to collect payments associated to the selected invoices.
In return, the company will receive early payment from these invoices instead of waiting 30 to 90 days for their customers to pay.
As a result, the company will benefit from an improved cashflow for their business operations.
How it works:
Depending the quality of your customers, lenders are typically happy to grant you a higher limit of funding so that you can execute your obligations to your customers.
With them as your financing partner, it allows you a peace of mind to take on new sales, fulfil orders and reduces the time you spend chasing payments from your customers.
Financing costs in this space can quite varied as it depends on:
Typically there are 2 fees involved with invoice financing:
The assessment criterias for invoice financing is generally more flexible as lenders focus more on the customers of the borrowers.
For this very reason, young companies are able to get financing here as long as they are able to secure orders from large customers.
Every business is different and hence, lenders usually customised their solutions to suit your needs.
Who can apply:
Documents required to apply:
How long does it take to approve?