Invoice financing is a great way for companies to improve their cashflow without compromising their credit history.
It provides companies incredible flexibility – the ability to raise interim funds, access funds quickly and to sell as many invoices (or as few) as they want.
For investors, the benefits are numerous – invoices mean payment is due, risk of non payment is low, and funds are tied up for a maximum of 90 days.
A much more flexible tool than invoice factoring, discounting allows companies to sell their invoices individually. In factoring, companies sell their whole receivables book.
From the University of Cambridge
"Understanding Alternative Finance, 2014"
Invoice financing is used to raise working capital
The vast majority (85 per cent) of businesses were financing invoices to secure working capital and 43 per cent of them had heard about invoice financing through online advertising. The speed of the process was what businesses valued the most (with 95 per cent stating it was a very important or important factor), with ease of use (81 per cent), transparency (85 per cent) and flexibility (85 per cent) also registering as either very important or important factors. Unsurprisingly given the reason for approaching invoice financing, the other important impact for SMEs was an improvement in cash flow, reported by 92 per cent of the respondents stating the effect. Almost all had approached banks beforehand with only a fifth receiving offers of funding from them. Over half saw it as 'unlikely' or 'very unlikely' that they would have received finance should they not have turned to an invoice financing platform.
Three in four would approach invoice financing before a bank in the future
Since receiving funding, 90 per cent of the respondents reported an increase in profit, 80 per cent of them saw an increase in turnover and 60 per cent recorded an increase in employment. Almost all plan to approach an invoice financing platform for funding in the future with three in four saying they would do so even if banks were to offer funding on similar terms. Eighty–six per cent are 'likely' or 'very likely' to recommend invoice financing to other businesses.
9th May 2016The Straits Times
Collabrations between banks and fintechs could also play a big part in addressing the traditional gap in small company funding here
Venture capitalists, private equity firms, corporates and a number of other players have poured an unprecedented amount of money into global financial technology (fintech) start-ups. More than $50 billion has been invested in almost 2,500 companies since 2010 as these innovators redefine the way in which we store, save, borrow, invest, move, spend and protect money
29th April 2016CFO Innovation
Eyebrows were raised in March when Epicentre Holdings Limited, a reseller of Apple products, raised S$1.5 million on Singapore-based peer-to-peer (P2P) lending platform MoolahSense