- July 19, 2020
- Posted by: avantconsulting
Singapore Invoice Factoring – Invoice Factoring is also known as debt factoring, it is a product that allows businesses in Singapore to sell their unpaid receviable invoices to a factoring company that will pay a sum to the selling part.
The factoring financial company will buy the invoice from the sell at a percentage of their total value and will take over the responsibility of collecting the invoice amount payments.
Avant Consulting is providing advisory services and also matching services for any company that will require such services. We will sit down with you to understand your case before coordinating with the service providers to ensure your case will get the help it needs.
So how does invoice factoring work?
As mentioned above, unpaid receivable invoices are sold to the factoring company at the start with a bulk of it coming in at the first installment. The company that has sold the invoice will therefore be able to use the funds to fund the operations or in fulfilling the project. The factor will then settle the remainder with the client when the project is completed.
Step 1: Your company provides goods or services to larger creditworthy customers and submit invoices to factoring company.
Step 2: Your company needs to be paid sooner than agreed terms terms ranging from 30 – 90 days.
Step 3: Your company sells its unpaid invoices to an invoice factoring company through a factoring agreement that is done between yours and factoring company.
Step 4: The factoring company will verify invoices to understand that it is valid with the B2B or B2G company receiving up to 90% of the invoice amount (depending on factoring company). Once the account is set-up payment. The payment arranged can be done within one working day.
Step 5: The larger credit worthy customers make payment directly to the factoring company according to the terms of the invoice. The factoring company then pays the balance of the invoice back to the B2B or B2G company minus a fee.
Reasons to use a factoring company
Getting bank loans from a main street banks can be really tough with many criteria.
Some companies may need access to funds at a faster pace so that they can get along with their projects.
Payment terms for most businesses are 30 to 120 days or when the project is completed to a certain level. This will cause cash flow issues with the business that is running on tight margins.
- Fast cash flow from the receivables you have and opening up working capital for other projects
- Chasing of late payments done by factoring company reducing administrative cost
- Factoring is cheaper than raising equity from other parties
- Customer relationships might be affected, since debt collection is done through a third party
- Cost of Factoring is higher than regular bank loan
Can any type of business use Singapore Invoice Factoring?
Invoice financing is great of Small & Medium Enterprises.
Factoring company will look at the following to decide if you are a SME they want to work with:
- Time Frame of the projects
- Risk involved
- Size and the company that will be eventually paying
- Your companies reputation and credit scoring
Cost of Factoring invoices
How to apply for Invoice Factoring in Singapore?
There are many of such firms in Singapore but not all come equal.
We have contacts with such companies and are able to get the best rates that they are able to offer.
Also to ensure you get your approval for your case, we work on consulting you first before we move them to the factoring companies.
If you are keen in getting your Factoring in Singapore done up fast, you can work with Avant Consulting to assist you in this process in searching for the ones with the best rates and also likely to get your approved.
Frequently Asked Questions (FAQ)
How Much Does a Factoring Company Charge?
Factoring companies charge between 1 – 5% of the total value of the invoices per month.
To know if it works for you, chat with our Loan consultants at Avant Consulting to understand this more.
This really depends on your business and also profit margins.
Chat with us to find out if your business is suitable.
Do the Banks Offer Factoring?
In Singapore, most do not, some financial institutions do take this up.
Avant Consulting Pte Ltd is formed by a group of financial professionals keen on assisting our clients in getting financing for their businesses and therefore to help them grow their businesses. If you are keen to get Invoice Factoring Financing in Singapore, do speak to us now!
We are also able to do some advisory work for you before you start on your work with other forms of funding. If you are able to do that we will be glad to work something out with you.