All is well and good in business until you feel a glitch in your finances. For small business owners, a healthy cash flow is everything. A growing company needs to maintain a balanced cash flow - that means getting invoices paid back on time. Some customers delay payment resulting in a blockage in the finances. Good thing there’s Invoice financing! A sales invoice sometimes referred to only as invoice, is a document sent by a seller to a purchaser. It is a transaction record that obliges the purchaser to pay the seller for products bought or services rendered. This creates an account receivable, which is money owed to a business by its customers. An invoice usually contains the following: Date of the transaction - this should always be included in all transactions because it is the basis for the due date of the payments. Business information of both parties - this includes the company name, business phone number and the physical address of the supplier and the customer. Contact persons - each of the two companies doing business together must have an authorized representative or a point person. This is the person who will coordinate payments and other transactions between the two companies. Details of the purchase - all invoices contain product descriptions such as brands and models, the unit price and the quantity purchased. It helps to be very specific when it comes to the details of the items, especially when large orders are made. It helps avoid mistakes in the orders. The price per unit and the total price are also part of the invoice. Terms of payment - both parties agree to the payment terms of the invoice. This is placed together with the details of the purchase. The sales invoice is a basis for an alternative loan known as Invoice Financing. This financing option allows you to bring back capital to your business by using your unpaid invoices as collateral for a loan. Companies like WeCompete Lenders can provide 90% of the total value of your outstanding invoices. When your customers make their payments, you will receive what remains of the 10% after WeCompete Lenders collects fees that range only between 1-3%. It is the perfect solution for slow-moving sales and late-paying customers. Other terms for invoice financing are account receivable lending and receivables financing. Some of the advantages of invoice financing include: Quick funding. The funding for this alternative loan option can be released within the day of approval! If your business is in immediate need of that capital, just prepare all necessary documents and apply online for invoice financing. Improved cash flow. One of the best offers of invoice financing is stability for your cash flow. With invoice financing, you can avoid falling short for the month because your outstanding invoices are as good as paid. Enhance flexibility. You can become more flexible with your customers when it comes to payment terms. Extending their payment dates would be no problem as long as you have access to invoice financing. Like most alternative loans, qualifying for invoice financing is easy. The minimum qualifications require businesses to have operated for at least six months and to have annual revenues of over $50,000. These are just general qualifications, though. The maximum amount you will receive will depend on factors like the number and the amount of invoice you have per month. Your creditworthiness will also play a role. If you are a startup company, it’s best to build your business credit before considering invoice financing. Two types of invoice financing You can easily qualify for an invoice financing, but there are 2 classifications under this loan option. Understanding these two can help you decide which type of invoice financing best suits your business. Invoice Factoring - This type of invoice financing gives the lender control of the company’s sales ledger. The lenders also collect the money owed by customers. The customers are made aware that the company uses invoice financing. Every time an invoice is created, the lender will pay for the debt of the customer. The lender will then provide the company with a percentage of the invoice. In this type of financing, the lender assumes the responsibility of collecting the debt from the customer. Once the customer makes a payment, the lender deduct the fees for the transaction and returns the remaining balance to the company. The two main advantages of using invoice factoring are 1) You automatically get an outsourced manager for one of your ledgers and 2) you get creditworthy customers because the lender does a credit check. Invoice Discounting - Here, the lender does not take control of the company’s sales ledger and the lender also does not collect debts in behalf of the company. Instead, lenders provide a percentage of the total value of the company’s unpaid invoices. The lender and the customers do not have any contact with each other because this type of financing can be arranged without the knowledge of the customer. If you apply for this kind of funding, you are responsible for collecting payments from your customers. The appeal of this lies in its discretion. Customers are not informed that you use invoices as collateral for a loan. How do I apply for invoice financing? Applying for invoice financing is easy. Like most alternative loan options, you can apply online. The requirements are: Valid IDs Voided business check Bank statements Credit score Outstanding invoices With these in hand, you can reap the benefits of a healthy cash flow for your business. WeCompete Lenders prides itself in having the lowest fees for invoice financing. Not only that, but we also give you the option of choosing from over a hundred different lenders. Make the most out of your sales invoice with financing through WeCompete Lenders. Send us your queries at [email protected] or call us at (844) 516 0633.