24 Nov What are Invoice Finance Solutions for SME’s
SME’s (Small Medium Enterprise) manage their cash flow very carefully. They need to ensure that accounts receivables do not get over extended, collection activities are managed and revenue is received in a reasonable amount of time. The gap in time from product delivery to the customer, invoicing to the customer and receipt of payment from the customer can range from 30 days to 90 days or longer. Operating your business in these conditions can really impact SME’s ability to meet demand and pay suppliers. This is where Invoice financing for SME’s can provide a solution that addresses these issues.
Customers demand longer terms for payment as part of the competitive negotiation. If an SME does not offer these payment terms they often will lose the business to the competition. Nonpayment of an invoice by a customer according to the terms of the contract represents a serious challenge for most SME’s. Cash flow is jeopardized, capital acquisition can be jeopardized and supplier payments can be jeopardized. All of these can seriously impact the overall health of the business. Invoice financing can help in these areas.
Invoice Finance Solutions for SME’s
Receive a percentage of your high quality receivables and turn this cash around to be used in general operations, ordering materials and funding equipment purchases.
Rolling Invoice Financing solutions allows SME’s to roll forward new invoices to be included as older invoices are paid by the customer.
Short term borrowing using Invoice financing improves a company’s working capital and the company’s cash flow position for shareholder reports.
How Does Invoice Financing work For SME’s?
Invoices from customers that represent quality risk assessments can be used as collateral for short term borrowing. Our team will assess the outstanding invoices your company holds for risk in terms of payment, length of payment terms etc and provide a percentage of the total as a short term loan. As these customer invoices are paid, the loan is repaid. As new invoices are issued they too can become candidates for invoice financing. A rolling short term loan based on outstanding invoices can be secured in this way.
Once the SME receives the proceeds of the loan, this money can be reflected on the books in capital accounts and operations accounts as needed. The cash can be used to purchase additional supplies, equipment to meet future orders and cover day to day operational expenses such as sales charges, manufacturing costs and so on. It goes without saying that each company accountant must manage their cash flow tightly to maintain proper treatment of the proceeds of the loan and allocation to budgets as per the corporate plan.
Will Invoice Financing work for Your Company?
The most appropriate way to address this question is to contact one of our operators and review your needs, your outstanding invoices and the credit worthiness of your customers and your company. Our operators are standing by. They can address all of your questions and get you started. Your company will no longer need to wait for long term invoices to be paid and cash flow will improve significantly as a result.