Invoice Financing / Factoring
Invoice Financing / Factoring

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:

  1. You get a invoice financing line of a predetermined limit by the lender. You get to factor your invoices up to this limit.
  2. Inform the lender that you would like to factor said invoices of your pre-approved customers.
  3. Lender pays you up to 90% of invoice amounts immediately.
  4. Your customers pay to lender directly (notified) or to you (non-notified) upon invoice due date.
  5. Some lenders are able to finance the purchase of goods so that you get cashflow even earlier.

Key Benefits

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:

  • Who is the lender? Financing could be from banks or financial institutions or alternative lenders.
  • How credit worthy are your customers? It is definately easier to get financing if your customer invoices are from government agencies rather than a start-up SME.
  • Are your invoices notified or non-notified? Notified financing allows the lender to collect payments directly from your customers wheras non-notified financing does not.

  • Typically there are 2 fees involved with invoice financing:

  • Processing Fee: Ranging from 0.5% to 1.5% of invoice value
  • Discount Rate: Ranging from 8% to 16% per annum, pro-rated daily
  • 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:

  • Local company, registered and physically present in Singapore
  • At least 30% Singapore or PR shareholding
  • Annual revenue of the company not more than S$100 million or not more than 200 employees

  • Documents required to apply:

  • Latest 6 months bank statement
  • Latest 2 years Audited / Unaudited financials or latest management accounts
  • Account Payables and Account Receivables aging list
  • Sample Invoice from customer to be financed
  • Copy of NRIC for all directors and guarantors
  • Copy of last 2 years Notice of Assessment for all directors and guarantors

  • How long does it take to approve?

  • Application for invoice financing is a longer process as compared to term loan
  • Allow for a month for the application
  • Once approved, bank will finance within the day upon submission of the invoice
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