In many points in our lives, we’ll start as novices. It’s not a surprise since no one’s really born a master of anything. We all begin somewhere and most often than not we start from the bottom or from scratch as others would put it. There’s completely nothing wrong with that. So what if you’re a newbie? That’s not an issue. Besides, we’re here to introduce to you the world of single invoice factoring and why it might just be the lifesaver you’ve been looking for.
As its name suggests, it is a type of financing medium that draws cash from a sales invoice or more specifically a single receivable. It is one of the many types of receivables finance that allows for immediate funds even in as fast as twenty four hours. So how exactly does it work?
It begins with the company choosing an invoice from which to draw the said funds from. It’s value shall be advanced prior to its maturity and therefore before the customer even starts to send in their payment. Cash is then received thus hastening the collection and cutting down the waiting period. The transaction creates a shift in burden. The right to collect and therefore the responsibility towards it shall now be borne by the financing institution. As for the company, it gets to use the resources in whichever way it pleases. Of course, this service comes with a fee as is with most things.
The reason why it works and why more and more entrepreneurs and business entities have come to use it is because it bears numerous benefits. For one, single invoice factoring is no loan so it’s without interest or collateral. It’s a single or onetime transaction too and involves no lengthy contracts. This means that in terms of fees, costs are minimal. Moreover it can be furnished in as fast as a day’s time which is unheard of in any other financing medium in the market.
Additionally, single invoice factoring hastens collections which helps in terms of improving financial liquidity and strengthening working capital. It’s also the prefect choice when in need of immediate resources for an emergency or pressing situation.
Of course, the quality of the receivable is crucial when opting for single invoice finance which is why businesses should make it a point to screen customers to whom credit is extended and that receivables management is upheld thoroughly and throughout.