The term invoice financing refers to the phenomenon in which a borrower obtains loans against unpaid invoices raised on the customers of his business.
Invoice financing is a way of improving cash flows since it allows the business to get its hands on the money that is otherwise, being tied up with the customers. The cash obtained through this type of financing can be used in many ways like making new investments, paying salaries, and paying for raw materials.
Invoice financing helps those businesses whose customers take a lot of time to clear their invoices. The business that is obtaining involve financing pays a percentage of the invoice amount as a fee. This fee is mutually agreed between the borrower and the lender.
Express Invoice Financing
Fundamentally, express invoice financing is not different from the traditional invoice financing because it follows the same model. However, some operational amendments have been incorporated in order to make it work in a swift manner.
Express invoice financing works online and allows businesses to get their hands on working capital in no time. There is very little paperwork involved in this mode of financing. In fact, the entire process, from start to disbursement, takes not more than a single business day.
Main Features of Express Invoice Financing
Credit sales are a norm in the business community. If you are dealing with a wholesaler, there is very little chance that he is paying you in cash.
Most of these customers do not pay immediately. Rather, they would take delivery of goods/services against an invoice that show the total amount due, and the due date by which this payment should be made by them.
Since this is the norm, and very few people would work with a business that insists on instant cash payment, there is no choice left for businesses to follow the market practice. However, the recievable amount becomes a missed opportunity when the business owner sees a great opportunity for growth, but cannot avail it due to insufficient cash flows.
Express invoice financing has been designed in order to cater to the need of such a businessman. This kind of financing helps the business owner to obtain the required cash within a single day, and use it for any purpose that he deems imperative for his business.
There are many useful features of Express Invoice Financing. The article below will discuss a few of them.
No Paper Work
If you go to a scheduled bank, lending institution, or a factoring company, you are required to submit a set of papers. These papers are forwarded to the credit department where they are analyzed, and then your case is either accredited or dismissed.
With express invoice financing, there is no need for paperwork. The entire process is carried out online. You may submit the required data through the internet which is automatically received by the relevant personnel.
Business owner is spared the hassle of making personal visits, copying papers, and submitting them.
Usually, invoice financing companies would not offer 100% advance against your unpaid invoices, the usual market practice is 80%. It means that if you give them invoices worth 100,000 U.S. dollars, you will get only 80,000 U.S. dollars as advance. You will also need to pay the invoicing fee.
However, through express invoice financing, a business owner can get advance against all of the invoices at their full value for just 0.5 percent weekly fee for up to 12 weeks. Check out FundThrough reviews, to learn what business owners have to say about express invoice financing.
No Involvement of Credit Bureaus
One of the most pressing problems faced by small businesses is that they cannot maintain good credit score owing to the nature of their businesses, and consequent issues with cash flows.
Express invoice financing becomes suitable in this regard because they do not submit applications to the credit bureaus.
It means that even if a business has a bad credit score, its chances of obtaining express invoice financing will not diminish by a single point. Moreover, the processing time of the application will also be reduced considerably.
Automatic Repayments Through Direct Debit
The repayment installments of an express invoice financing are developed in a way which makes it easy for the borrower to pay them. These are usually very little amounts that the business needs to pay back on a weekly basis.
Another very useful facility with express invoice financing is that the business does not need to go to the bank in order to deposit repayments cheques. The amount of fee or repayment, which is already agreed between the financer and the borrower, is directly debited from the account number which has been shared with the relevant personnel.
The borrower would simultaneously inform his or her bank regarding the repayments that need to be made from the account on a weekly basis. The arrangement is beneficial for both the lender and the financer.
Reminders for Repayments
A business owner already has lots on his plate. Often, the situation becomes so hectic that the owner simply forgets that there is a repayment looming. When he or she recalls the repayment, the time is already passed many times, and there is a chance that he or she will either face a penalty or inconvenience due to this missed repayment.
One of the most beneficial features of express invoice financing is that it sends constant reminders to the borrower before a repayment becomes due.
If there is a direct debit instruction already with the bank, the financer will remind you at least 24 hours in advance that a specific amount will be debited from your account. It helps you in planning your cash flow management accordingly.
The Final Word
There are many advantages of express invoice financing. First of all, it saves a lot of time. It also spares the hassles associated with the traditional borrowing methods. It is a great way of cashing in your unpaid invoices, and using that same money where it is needed the most.