Invoice Financing in Singapore

Introduction

Invoice financing is a financial method where you finance your accounts receivables to a third party or a financial institution. There are two commonly used practices in Invoice financing. They are Invoice Factoring and Invoice Discounting. In both cases, the invoices are sold to a company or a third party, who is commonly known as the “factor”.

Invoice Financing in Singapore

In Invoice Factoring, the factoring company credits the business with an upfront payment of 70-90% of your invoice amount. The factoring company then collects the payment directly from your customers. You’ll be paid the rest of the 30-10 % pending of the invoiced amount minus a factoring fee once the customer pays off the invoices.

In Invoice Discounting, the factoring company credits you with a larger percentage of the invoiced amount but the collection end is managed by the business owner. He/She pays the factoring company when the customer clears the invoices receives the rest of the percentage of invoiced amount minus the factoring charges.

Since Invoice factoring is the most common practice, the term “invoice factoring” is used interchangeably with “Invoice financing”.

Why Do Businesses Use Invoice Financing?

Invoice financing benefits the businesses with the following:

  • Steady cash flow
  • Pay off employees and suppliers on time
  • Reinvest in their business
  • Grow business without any delay

Funds can get tied up in accounts receivables and may not be available when it is needed in the business. Invoice financing helps difficult situations like customers paying late and not having enough funds to grow the business by financing accounts receivable.

Invoice Financing Companies

Invoice financing companies provide the financial services where you can sell your accounts receivables and get immediate funds based on that. This can be either by invoice factoring or invoice discounting. Depending on the process you choose, the collection end is managed by either the factoring company or yourself.

You can finance your invoices through a financing institution. Once you create your account with the finance institute, you will be asked to integrate your online accounting software with the account. The invoices submitted this way will be verified by the financing authorities and approves the invoices that can be traded. 

The financing company makes an upfront payment of 70-90 percentage of the approved invoice amount to you. Depending on the financing service (factoring or discounting), the collection process takes place when the time is due. Once the customer pays off the invoices, the financial institution pays you the rest of 30-10 percent of the invoice amount minus a service charge. 

How Does Invoice Financing Work?

You can finance your invoices through a financing institution. Once you create your account with the finance institute, you will be asked to integrate your online accounting software with the account. The invoices submitted this way will be verified by the financing authorities and approves the invoices that can be traded. 

The financing company makes an upfront payment of 70-90 percentage of the approved invoice amount to you. Depending on the financing service (factoring or discounting), the collection process takes place when the time is due. Once the customer pays off the invoices, the financial institution pays you the rest of 30-10 percent of the invoice amount minus a service charge. 

Invoice financing in Singapore

Invoice financing is not a new term in Singapore, especially when it comes to SMEs. Invoice financing is a very commonly used financial solution in Singapore when businesses face a cash crunch. Invoice financing services provide quick funds which help businesses come out of their cash flow problems quickly and grow their business.

Businesses also use invoice financing to maintain long term liquidity by financing their slow-paying invoices. Many businesses keep a long-lasting customer relationship with the financing companies. You need to choose a trustworthy company with whom you engage in financing for smooth functioning.

Finaxar is a leading invoice financing company in Singapore

At Finaxar, we provide invoice factoring services to our customers in a faster and secure way. Our application process is online and hassle-free in terms of documentation. You can start with us by signing up on our website and connecting your accounting software to the account. Our cash flow experts are dedicated to go through your application and complete the verification process within 3 days. Once approved, you’ll be credited with 80 % of the invoiced amount. There is no fee you need to pay at any stages till here.

Once the payment date is due, we will collect the invoice amount directly from your customer and then will proceed to pay you the rest of 20 % of the invoiced amount. At this step, we will deduct a small fee for our services. If you have any more doubts on Invoice factoring and how it works, you can consult with our support team here.