An increasing number of entrepreneurs seem to be taking advantage of what invoice financing Singapore offers. And they’re not to blame considering invoice finance can be a remarkable tool for unlocking the capital already tied up in your business. If you’re a business leader that’s focused on growth, but are unsure how to fund it, then you’ve definitely come to the right place.
In this simple guide, we will take you through some of the things you need to know about invoice financing before leveraging it to your advantage. Read on below to uncover more before deciding on the next step of action.
What is Invoice Financing?
You can refer to invoice financing as when a business decides to sell its unpaid invoices to a third-party lenders. The lender offers the business with an advance of around 80-90% of the total invoice value and once the customers pays the full balance, the lender will return the balance to the business, without its lending fees. This helps businesses enhance their cash flow, by offering them immediate access to funds that are usually tied up in outstanding customer payments.
Who Can Leverage Invoice Financing?
Invoice financing leverages cash that’s tied up in a business’s unpaid invoices. Naturally, you can regard it as a perfect solution for businesses where cash flow is significantly impacted by awaiting these payments. Well-established businesses usually have enough readily available working capital to await customer payment and still execute their growth plans.
When a lender offers a business with an invoice financing facility, the lender gives the business an advanced payment of its outstanding invoice. The business’s customer then pays the invoice, paying the lender rather than the business.
This allows businesses to access cash up front, but without the hassle of managing loan repayments, as this is covered by the invoice payment and fees built into the facility. For this reason, you should consider giving it a try.
What makes invoice financing Singapore worth your attention is the sheer fact that you can quickly access cash for your business by converting unpaid invoices into immediate funds. This helps support working capital management, enhances cash flow and allows you to focus on their growth and success, rather than chasing customer payments.
Not to mention some lenders offer additional benefits such as bad debt protection, which reduces the risk associated with bad debt and/or customer non-payment.
