Until now, this powerful financing tool has mostly been the exclusive preserve of large companies in cosy relationships with conservative bankers and financiers.
Now, thanks to the advent of single invoice finance just about any business can enjoy the benefits of selling invoices.
It has never been easier to raise working capital without going into debt and without handing control of your business to outsiders.
This is not to say that traditional factoring is obsolete. It isn’t. Many companies still require the “old-school” style of support. But, single invoice finance means the opportunity to use cash flow funding to boost profits and grow is within the reach of every business not just a select few.
Single invoice finance has also created a shift in the balance of power away from the factoring company to the consumer.
A business operator no longer needs to sign a long term contract giving the factor the right to buy invoices for up to 12 months – and interfere in the running of the company. Now, the business operator decides when and if it is appropriate to sell an invoice and how many of them.
There are 10 reasons why single invoce finance is the fresh new face of factoring.
Most factoring companies require business operators to sign up for long-term contracts. Single invoice finance does not.
Most traditional factoring companies will advance a maximum of 80% of the value of the invoice with the remainder being paid to you once the account is settled. The single invoice model we use allows for an advance of up to 90%.
Most of the traditionalists demand access to all your invoices and the right to buy as many or as few as they want. Single invoice finance doesn’t.
The “old-schoolers” require customers to have a minimum annual turnover of between $500,000 and $2,000,000. Our finance model does not impose a minimum turnover requirement.
Banks and large financiers operating in this space generally won’t buy invoices unless the total value is between $150,000 and $500,000 a month. This puts many smaller businesses at a disadvantage, however single invoice finance allows for invoices of just a few thousand dollars to be sold.
Establishment Fees/Account Fees/Exit Fees
Most banks and larger financiers charge fees on top of their advertised factoring rates. This can add significantly to your costs. With single invoice finance what you see is what you get. Our product allows for one fee which is paid at the end of the transaction and is very competitive with the traditional factors when their mandatory “extras” are taken into account.
Many factoring companies require you give 3 months notice to terminate an agreement. This can seriously hamper your business because you can’t begin working with another financier during that time. With Single invoice finance there are no long-term contracts and therfore no termination clauses.
Annual Interest Rate
The traditionalists often include an interest component in their fee structures. We do not. Depending on how large the invoice is and how long before it is to be paid, we charge a percentage of the invoice amount, but because it is a one-off transaction it is not an “interest rate”. It is a straightforward fee.
Most factoring and invoice discounting companies will only deal with companies which have large number of customers and will only factor a percentage of the invoices sent to them. This means that small companies with only one or two big customers are immediately ruled out from obtaining cash flow finance. However, our finance model is not so constrained and where we are convinced the debtor is a business in good standing and we are satisfied it will pay the bill we will consider providing funds.
Unless a business has a long and successful track record most factoring companies won’t look at it. We will consider start ups as long as their debtors are strong and we are satisfied the invoice will be paid.
At the end of the day, small and medium sized businesses have an effective and reliable source of business cash at their disposal. To find out how single invoice finance works follow this link.