What is Invoice Financing?
Invoice financing is a form of short term financing that allows a business to borrow against their customers’ unpaid invoices. It differs from the typical unsecured term loans, because businesses pledge these invoices or account receivables as collateral to receive funds upfront.
Businesses that provide goods or services in bulk to other businesses usually do so on credit. This means that payment is not due immediately, but on a fixed date sometime in the future. In such cases, businesses commonly issue invoices to their customers as an official notice containing the total amount and due date agreed upon by the buyer. Such arrangements are more common in business to business (B2B) operating models.
However, offering credit as payment terms to buyers can come with adverse consequences. Unpaid invoices tie up the sales revenue that could have been reinvested to grow the business. As a result, the narrowing cash flow diminishes the business’s profitability. Additionally, it can impact the business’s ability to pay for its operating expenses.
Hence, financing an invoice could be a way for your business to overcome the problems that arise from unpaid invoices. By pledging your invoice to a private funder, you can immediately obtain funds based on a fraction of your invoice amount.
What Are The Benefits Of Invoice Financing?
Immediate Access To Funds
Invoice financing provides you with immediate access to funds tied to your account receivables, speeding up your working capital cycle. With Poss Capital, receive funds within 48 hours of approval. This means that you can be paid as soon as an invoice has been issued to your customer, instead of having to wait for their payment.
No Additional Collateral Required
Invoice financing is based on the value of unpaid invoices, rather than tangible assets. The invoice itself is being pledged as collateral. Therefore, no additional collateral is required. You will not be putting any other business assets at risk.
Flexible Payment Terms
With invoice financing, you will now be able to offer longer payment terms to your buyers, since you can convert your invoices to available funds before the due date. Hence, you will be able to attract more established customers, who usually favour longer term contracts.
With increased access to funds, you can invest in initiatives that foster business growth, such as expansion or marketing campaigns. Focus on growing your business without having to worry about delayed payments.
Introducing Payd by Poss
At Poss, our purpose is to lend a helping hand to growing SMEs in Singapore and help you achieve your business goals. With this in mind, we have a fuss-free online application and quick approval process, allowing you to gain access to your funds in no time.
- Invoice financing of up to S$100,000 split into 3 equal repayments
- Factor fee from as low as 1.2% per month
- One time disbursement fee of 5% deducted upfront
- Transparent fees. You’ll always know exactly how much you have to pay.
- No prepayment penalties. Pay off loans faster without getting penalised for it.
How Do We Stand Out From Other Invoice Financing Providers?
Payd by Poss does not offer an invoice financing line with a pre-approved credit limit. Instead, it considers individual invoices submitted during each application.
We understand that a lump sum repayment immediately after receiving your invoice payment would drastically impact your cash flow. Hence, we divided repayment into 3 equal amounts payable, letting you better manage your business.