Struggling with slow-paying customers and tight cash flow? Our Factoring (Invoice Finance) services help you convert unpaid invoices into immediate cash. Enjoy quick access to the funds you need without waiting for lengthy payment terms.
At Finnex, we understand the challenges of managing cash flow and waiting for invoice payments. Thus, our Factoring (Invoice Finance) services are designed to transform your unpaid invoices into instant cash. You can access up to 90%* of your invoice value within 24 to 48 hours, empowering you to invest in growth, cover expenses, and keep your business on track.
Focus on growing your business while we handle the cash flow—easy, fast, and efficient!
Up to 90%* financed value of customer invoices!
A. NOTIFIED
The customer or company to whom the invoice was issued is informed of the invoice sale and required to make payments to the factor doing the collection.
B. NON-NOTIFIED
The customer or company to whom the invoice was issued is informed of the invoice sale and required to make payments to the factor doing the collection.
Step 1: Invoice Generation
After delivering goods or services to your customers, you issue invoices with payment terms. These invoices represent the money your customers owe you.
Step 2: Selling Your Invoices to a Factor
Instead of waiting 30, 60, or even 90 days for customers to pay, you can sell these invoices to a factoring company (the “factor”). The factor agrees to purchase your invoices at a discounted rate, typically providing you with up to 90%* of the invoice value upfront. This immediate cash infusion helps you cover expenses, reinvest in your business, or manage other financial obligations.
Step 3: Customer Payment Notification
Depending on the type of factoring you choose, your customers may or may not be notified of the invoice sale:
Notified Factoring: Your customers are informed that their invoices have been sold and will be instructed to pay the factor directly.
Non-Notified Factoring: Your customers continue to pay you as usual, and the factor manages the transaction behind the scenes.
Step 4: Collection of Payments
The factor takes over the responsibility of collecting payments from your customers. With notified factoring, the customers make their payments directly to the factor. In non-notified factoring, you collect the payments and forward them to the factor.
Step 5: Final Settlement
Once the factor collects the full invoice amount from your customers, they will release the remaining balance to you, minus their service fee. This fee is typically a small percentage of the invoice value, which compensates the factor for the cash advance and collection service .
The requirements for factoring can vary depending on the factor’s criteria, the industry, and the specific terms of the agreement. However, the general requirements often include the following:
These requirements can vary slightly depending on the factor and the specific circumstances of your business. It’s always best to consult directly with a factoring company to get a detailed understanding of their criteria.
Factoring (Invoice Finance) offers a range of advantages that can significantly benefit businesses, particularly those that operate in industries with long payment cycles or face cash flow challenges. Below are the key benefits:
1. Immediate Access to Cash
One of the most significant benefits of factoring is the ability to convert your receivables into immediate cash. Instead of waiting 30, 60, or even 90 days for customers to pay their invoices, you can receive up to 90%* of the invoice value within 24 to 48 hours. This quick infusion of cash allows you to cover operating expenses, pay suppliers, invest in new opportunities, or handle any unexpected costs.
2. No Additional Debt
Unlike traditional loans or lines of credit, factoring is not a form of debt. When you sell your invoices to a factor, you are not borrowing money but rather receiving an advance on funds already owed to you. This means factoring doesn’t appear as a liability on your balance sheet, preserving your company’s creditworthiness and keeping your debt levels manageable.
3. Improved Cash Flow Management
Maintaining a healthy cash flow is crucial for any business. Factoring provides a consistent and predictable flow of funds, helping you manage day-to-day expenses more effectively. With steady cash flow, you can meet payroll, take advantage of supplier discounts, and reduce the risk of late payments or missed opportunities due to cash constraints.
4. Flexible and Scalable Financing
Factoring is inherently flexible and can scale with your business. As your sales and receivables grow, the amount of financing available to you through factoring increases as well. This scalability makes factoring an ideal solution for businesses experiencing rapid growth or seasonal fluctuations, ensuring you always have access to the working capital you need.
5. Outsourced Accounts Receivable Management
When you engage in factoring, the factor takes over the responsibility of collecting payments from your customers. This can save your business time and resources by reducing the need to manage accounts receivable internally. The factor’s expertise in collections can also improve payment times and reduce the likelihood of bad debt.
6. Focus on Business Growth
With the burden of cash flow management and collections lifted, you can focus on what matters most—growing your business. Factoring allows you to invest more time and resources into expanding your operations, acquiring new customers, or developing new products and services, without worrying about cash flow interruptions.
7. Improved Credit Management
Because the factor evaluates the creditworthiness of your customers, you gain insights into the financial stability of the companies you’re doing business with. This can help you make more informed decisions about extending credit and managing risks, ultimately leading to better credit control.
Factoring is an ideal solution for businesses of all sizes that:
Factoring is especially beneficial in the following situations:
During High Growth Periods
When your business is expanding quickly and you need capital to sustain growth.
To Manage Seasonal Fluctuations
If your cash flow is inconsistent due to seasonal sales cycles, factoring can provide the funds needed during slow periods.
When Facing Long Payment Terms
If your customers have extended payment terms (e.g., 30-90 days), factoring ensures you have immediate access to funds.
In Times of Economic Uncertainty
When traditional financing options are limited, factoring provides a flexible alternative.
Factoring can be applied across various industries, including:
Factoring offers several advantages over traditional financing options:
We understand our client’s business models and strategies to help our clients to structure and obtain the right credit facilities by objectively assessing their business profiles and documents before finding the most suitable financial institutions that could give them the highest approval chances.
We also try to get the best deal for our clients by looking for the lowest interest rates in the market, but this could still vary depending on the company’s financial standing and profile.
If your company is not able to qualify for a loan at the moment, we would advise on what areas you can improve to qualify in the future.
At the end of our sales process, a Fund Utilisation Planning on the newly acquired facilities will be conducted in an engaging session with the business owner to set the greater path to success.
Every client is important to us and we do our best to meet the estimated timeline given.
* Subject to the credit facility proposed and applied for, processing time may take longer or shorter.
Factoring involves selling your accounts receivable (invoices) to a third-party financial company (factor) for immediate cash, whereas a traditional bank loan involves borrowing money that must be repaid with interest over time. Factoring is not a loan, so it doesn’t add to your debt, and approval is based on your customers’ creditworthiness rather than your business’s credit score.
Factoring fees typically range from 1% to 5% of the invoice value, depending on factors like the industry, the creditworthiness of your customers, the invoice amount, and the time it takes for the customers to pay. These fees cover the advance provided and the collection service.
This depends on the type of factoring you choose. In Notified Factoring, customers are informed and make payments directly to the factor. In Non-Notified Factoring, customers are unaware that you’re using a factoring service, and they continue paying you as usual.
Funds are typically available within 24 to 48 hours after you submit your invoices to the factor. The exact timing may vary depending on the factoring company and the specifics of your agreement.
Yes, many factoring companies offer flexibility in choosing which invoices you want to factor in. This means you can factor specific invoices based on your cash flow needs or other business considerations.
This depends on whether you have a Recourse or Non-Recourse Factoring agreement:
Yes, factoring can be an excellent solution for start-ups and small businesses, especially those with limited credit history or those experiencing rapid growth. Since factoring relies on your customers’ creditworthiness rather than your own, it’s accessible to newer businesses that might struggle to qualify for traditional financing.
Factoring is commonly used by businesses in industries with longer payment terms and significant receivables, such as manufacturing, wholesale, distribution, transportation, logistics, staffing agencies, and professional services. Any business that regularly issues invoices to other businesses can benefit from factoring.
Factoring can be structured to have minimal impact on your customer relationships.
In Non-Notified Factoring, your customers remain unaware that a factor is involved, so your interactions with them remain unchanged.
Even in Notified Factoring, professional factoring companies handle collections with care to ensure that customer relationships are maintained. Many businesses find that the improved cash flow actually enhances their ability to serve customers effectively.
The minimum and maximum invoice amounts can vary depending on the factoring company. Some factors may have a minimum invoice size requirement, while others cater to businesses of all sizes, including those with smaller invoices. Similarly, most factors are capable of handling large invoices, making factoring a scalable solution for businesses with varying needs. It’s important to discuss your specific requirements with the factoring company to find a plan that works best for you.
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