Category: receivables financing

Why Single Invoice Finance is Value for Your Money

Single Invoice Finance has proved to be one of the most effective means by which businesses get to derive cash without having to suffer the hefty consequences that traditional credit brings. How so? That’s what you’re going to find out today.

Having two major options under its belt, Single Invoice Finance can either be int eh form of factoring or discounting.

In factoring, businesses sell the right to collect against a particular receivable to the provider who in turn provides an advance equivalent to at least 80% of its total value. The transaction shifts the burden of collection from the company to the financing institution. The former then uses the cash as it sees fit. The latter on the other hand waits until maturity and collects from the owing customer. Upon completion, the remaining balance less the fees shall be forwarded.

In discounting, businesses use such invoice as security in exchange for an advance received of its value which it can use as it deems proper. The burden of collection remains with the company. Upon maturity and once collection is complete, the entity is bound by terms to repay the financial institution of the advance received plus fees.

Although slightly different, both factoring and discounting provides the same benefits as follows.

value for moneyFor one, they are easier to process. With lesser requirements and the creditworthiness of the customer considered (not the company’s), the application process down to the approval and the cash release is relatively fast. Some financers can even process this in a matter of twenty four hours.

Second, there is only one invoice to be used. Otherwise known as single or selective invoice financing, it is a onetime transaction. There are no contracts involved and the fees shall only apply to one. The entity shall also have the complete control and can choose which invoice to use. How often the service is to be had and when shall also rest in their shoulders.

Third, it’s a good way to inject cash into the system. Because it’s fast, it is a tried and tested method that helps a dwindling cash flow and helps strengthen working capital. It’s also one way to hasten collection.

Lastly, Single Invoice Finance is no debt. It’s not a loan or a credit or a liability. Therefore, it doesn’t have the strings attached to one such as interests and penalties. It is an asset transaction and is reflected in the books as such.

Receivables Financing: An Effective Emergency Funding Option

In business, money matters. These financial resources are essential for a number of things. You need it to purchase raw materials, to pay for employee salaries and wages, to pay the lease and all other operational as well as general and administrative expenses.  Additionally, funds are needed to provide for expansion and other corporate ventures. Add in to the pile emergency and contingency cases which make it imperative for businesses to always plan the management and use of this limited resource. But when worse comes to worst and an emergency pops out, where can entrepreneurs get their needed funds? The answer is through receivables financing.

receivables-financing-ukRemember that even if sales mean profit, they do not always mean cash. Customers and clients do their purchase either through cash or through credit and in many cases, the latter prevails. The problem with this though is that even if customers do pay, the money is not always readily available for use should the entity need it. It will take time before it will be actually realized and held by the business.

The only way to hasten up the collection process is through funding your expenses or deriving cash from the unpaid receivables or so called customer invoices. This is achieved through receivables financing.

What happens in this type of funding method is that entities get to receive majority of the value of the receivables in advance before customers actually pay in full. Oftentimes, financial providers will give about eighty to ninety five percent of the receivables’ value with the balance less agreed upon fees only to be forwarded after full collection has been received from the owing customers. To put it simply, it’s like selling off your customer invoices to an institution, receiving the amount equal to its value and then going on with business as usual.

Another good thing about using receivables financing especially during emergency cases is the fact that they are very quick to process. In as fast as twenty four hours, the fund can be provided already. Additionally, even struggling and losing companies can make us of it as receivables finance providers do not bank on the financial status of the businesses seeking it but rather on its owing customers. No financial reports will even have to be submitted for perusal and one’s credit history and grade will have no impact on the application.

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