Validus Invoice Funding
- Get finance up to S$500,000
- Expedite cash flow for your business
- Get up to 80% of your invoices funded
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Invoice financing for businesses in Singapore might be a lower risk option for commercial borrowing. Unlike other types of lending, you don’t have to secure your loan with collateral. But you must have a steady stream of revenue that is backed up by invoices from your clients. Read on to find out more about invoice financing in Singapore including how it works, potential providers and whether it might suit your business needs.
Invoice financing allows businesses to borrow based on invoices that they are owed by their customers. This provides SMEs with the chance for a useful short-term financing option, with typically lower interest rates than other short-term financing methods.
Invoice financing allows businesses to obtain loans based on the value of payments they are owed from their customers. Lenders typically cover 70 – 90% of a business’s total invoices. This funding tends to be offered for short durations, from 15 days to 1 year.
Invoice financing is considered less risky for lenders, in comparison to other types of business loans, as the borrower has already delivered to customers and has a reasonable expectation to be repaid. As a result, interest rates related to invoice financing in Singapore tend to be lower than similar short-term loans. Such financing is offered both by banks and crowdfunding platforms. However, banks tend to be more selective in offering invoice financing and generally offer lower interest rates to approved applicants.
An advance fee may be charged by lenders, which is usually between 2-5% of the invoice amount. The exact costs involved will depend on the nature of your business and the lender’s requirements.
Here are a few things to consider before you decide which option for invoice financing in Singapore may be best for your business:
Here is a list of providers who, at the time of writing on March 2020, offered merchant cash advances in Singapore:
These are some pros that make invoice financing an appealing option to many SMEs in Singapore.
Although invoice financing might be a good option for your SME, but sure to take note of these potential drawbacks before choosing a provider:
It’s important to be aware that some SMEs may find it challenging to find lenders who are willing to accept them for credit.
Invoice financing for businesses in Singapore could be a good short-term financing solution for SMEs with a significant amount of accounts receivable in the form of invoices. This form of financing may offer lower interest rates when compared to other short-term borrowing options. Additionally, some lenders offer cash disbursement very quickly, which could be beneficial to your business if you are seeking capital support immediately. However, SMEs without significant invoice amounts would be better off considering other short-term financing options, such as micro loans or potentially another type of business loans.
Is my business eligible for invoice financing in Singapore?
Although eligibility requirements differ across providers, your business should generally be incorporated in Singapore and meet certain revenue requirements.
What’s the difference between invoice financing and invoice factoring?
Invoice financing involves more of an ongoing relationship between the borrower and the lender. The borrower is often charged on a monthly basis, or based on the time period between the invoice submission and repayment of the loan. On the other hand, invoice factoring is a process where you sell your invoice to a third-party company, which pays you for that invoice and collects money from your clients directly. This works as a one-time service.
Whose responsibility is it to collect invoices from customers?
The responsibility falls on you, the business acting as the borrower.
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