Invoice Financing – Let’s Understand
Understanding the “ABC” of Invoice Financing is a crucial step to move ahead with your decision-making processes. As a growing small-medium enterprise, your goals are largely concerned with optimizing liquidity.
As you are on your way to growth and expansion, your company would want to maintain control over the cash flows, identify stuck cash and put it to the day-to-day business operations.
It is, therefore, financial support services such as Invoice Financing help you have better control over your short-term liquidity needs.
What is Invoice Financing?
Covert pending accounts receivables to cash right away!
Invoice financing allows you to meet your short-term cash needs based on the unpaid invoices of your business. These invoices are pending accounts receivables and are to be paid at a later date by your customers.
Mostly, Invoice Financing allows you to connect to a financier or lender who is ready to invest the entire or a percentage of your bill/invoice’s net worth.
This process could get you going with your company’s crucial operations without waiting on for your customers to clear the bills.
Currently, the market also offers similar financial support services such as Invoice Factoring, where your customers themselves clear the invoice with the lender.
However, Factoring takes away your control as a business to maintain a strong check over your transactions with clients. Whereas, Invoice Financing gives you the added advantage and helps you to maintain a better transactional cycle.
How does it help?
Invest in operations without depending on customer invoices.
While you understand the “ABC” of Invoice Financing, it is also important to deconstruct how it is helping your business needs.
Invoice Financing is one of the simplest ways of getting easy cash without added burden.
It doesn’t limit your growth and significantly improves the overall cash flow management.
By instantly liquefying your pending accounts, you can pay-up short-term costs such as utilities, employee payments or other operational payables efficiently without either affecting your reputation or functionality.
While you manage your operations with the loan provided, you can offer flexibility in payment at the customers’ end. This helps in building better relationships with your existing stakeholders.
How does it work?
It is simple and with Lendo, we make it simpler!
Before you start, you must be aware of the details and “ABC ” of Invoice Financing so that you are self-informed on the process.
While you carry your business operations, as usual, the first step is to invoice your customer.
The second step involves invoice clearance with the customer and then you pass on these details to the finance provider. Depending on the provider, such as Lendo’s case, you might need to register. Followed by an application and provide supporting documentation so that authentication can be made. This helps in better transparency of the process.
Once your company qualifies the scrutiny, your invoice becomes valid for finance. You are then provided by the percentage of the amount or the amount agreed by the lender.
At Lendo, we connect you to a potential investor on your bill and once the amount is collected, the payment is made to your account.
After this when you receive the amount from your customer on the date agreed, you pay back the investment received to the lender.
And lastly, you are good to go for another time!