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Invoice Financing

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FAQ

What it means
What is Invoice Financing?

Invoice financing is a form of short term borrowing which is extended by the bank or a lender (E.g. Factoring Companies) to clients based on unpaid invoices. Companies often engage Invoice Financing to meet Short Term Liquidity or working capital needs. Higher liquidity allows companies to grow and run business operations efficiently.

What is the Process like?

The procedure is simple. E.g. You sell your outstanding invoices to a Lender / Factoring Company, and they pay you a Cash Advancement of up to 80 - 90 % (depending on the lender) of the full invoice value. Once the lender receives full invoice payment from the debtors, they'll pass the remaining 10 - 20 % of the Invoice Value back to you, after deducting a small fee.

How does Invoice Financing benefit me?

Invoice Factoring can be to your advantage if you are a Start-up / SME that:

  • Requires a quick injection of Cash Flow for Business Opportunities & Rapid Expansion.
  • Often has to wait long periods of Credit Terms for Receivables to be convered into Cash

Typical Advantages:

  • Cash Advancement can be made to you within days after approval.
  • Affordable form of Short Term Financing
  • No requirement for Collateral
How much will you advance to Invoice Sellers? How do you determine that value?

Depending on the Credit Analysis on your company, the Lenders determine a LTV & Interest Rate that matches the best interests of both parties.

What are the Fees associated?

Typically, Lenders & Factoring Companies charge "Interest Fees" and "Processing Fees". On the other hand, some lenders may charge "Set-up Fees", "Insurance Fees" and "Disbursement Fees".There might be hidden fees associated as well. Do consult your Relationship Manager on the transparency of their Fee Structures.

How are the Interest Fees charged?

Interest rates range from 1 - 3 % per month, and will be charged on the facility until the date of repayment.

How are the Processing Fees charged?

Lenders / Factoring Companies have various sorts of processing fees. They typically charge a "One-time Processing Fee" on the LTV granted.

Why do Businesses use Invoice Financing?

Instead of waiting for 30 - 90 days (Credit Terms), businesses often engage Invoice Financing as means of quick access to liquidity from their receivables. Higher liquidty allows companies to grow and run business operations efficiently. It allows businesses to obtain an advance of up to 90% of the invoice value with the 10% balance (less a small fee) received when the debtor pays thereafter.

Who is Invoice Financing suitable for?

Invoice Financing is suitable for manufacturers of, wholesalers, importers and many other service industries. Lenders / Factoring Companies are usually willing to finance your company if you are a growing business with moderate sales, or a larger business with strong sales and a plenty of opportunities, or with equipment to finance. Most Factoring Companies are also willing to finance Start-Up companies, provided that the owners/directors are well experienced and the business is otherwise well resourced.

How do I qualify for Invoice Financing?

Ideally, you'd meet the basic criteria if you sell goods or services on normal credit terms to various creditworthy businesses or government agencies, and your invoices are for fully delivered goods or fully provided services. The age of your business, its trading results and your asset position are less important when it comes to facility approval. Lenders are generally more interested in the Creditability of your customers (Debtors).

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About Invoice Financing

What is Invoice Financing?
Invoice financing is a form of short term borrowing which is extended by the bank or a lender to clients based on unpaid invoices.
Who is Invoice Financing suitable for?
Lenders / Factoring Companies are typically willing to finance your company if you are a growing business with moderate sales, or a larger business with strong sales and a plenty of opportunities.
Why do Businesses use Invoice Financing?
Companies often engage Invoice Financing to meet Short Term Liquidity needs. Higher liquidty allows companies to grow and run business operations efficiently.
How do I qualify for Invoice Financing?
Ideally, you'd meet the basic criteria if you sell goods or services on normal credit terms to various creditworthy businesses or government agencies, and your invoices are for fully delivered goods or fully provided services. The age of your business, its trading results and your asset position are less important when it comes to facility approval. Lenders are generally more interested in the Creditability of your customers (Debtors).
How much will you advance to Invoice Sellers? How do you determine that value?
Depending on the Credit Analysis on your company, the Lenders determine a LTV & Interest Rate that matches the best interests of both parties.
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FAQ

  • How Long Does It take for a Loan To be approved?
  • Depending on the application the loan approval process will take between 3 to 10 working days
  • What is the interest rate that I can expect?
  • For the Micro Loan scheme, you can expect an interest rate of 3.7% flat per annum. You can pay off the loan at any point of time and the interest will be pro-rated
  • How do I know which loan I Quaify for?
  • If you are a Singapore incorporated company, you can potentially qualify for business financing, no matter how long your company has been incorporated. To know your options simply enquire here or call us.
  • Which lenders do you work with?
  • We work with all local and foreign banks in Singapore, Private Financiers and other lenders.
  • How do I get started with an application?
  • Simply enquire here, or drop us a call.