May 2018
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  • invoiceEach and every financing option comes with its set of strengths. True, there may be no one size fits all solution but there’s one that’s bound to complement our needs best. It just takes adequate research to get to the bottom of things starting off with single invoice discounting.

    Now a lot of people or even businesses may find it new to their ears but don’t be fooled. This financing method has been in use and very much so by entities all over the world for a good number of years.

    An option under the receivables finance method, it allows a business to choose a particular sales invoice with its value to be advanced. In other words, the cash associated to it shall be received prior to its maturity and provided by a financial institution. In exchange, a minimal fee shall be paid by the business.

    Still confused? Let’s tackle it in even more detail.

    Step1: The company chooses an invoice to discount.

    Step 2: The provider shall assess the invoice and if it passes the requirements shall process the release of the cash advance.

    Step 3: The company receives the cash and uses it as desired. The invoice by this time shall be presented to the provider as a security or guarantee.

    Step 4: As the invoice matures, the company collects the payment from its owing customer.

    Step 5: It then goes on to pay the financial institution for the advance taken plus a fee.

    That’s as simple as it gets. But there’s more to single invoice discounting that merely its simple and streamlined process. It’s got quite the benefits that pack a punch and would make any entity want to consider it.

    First of all, it’s no debt. The transaction does not fall under a liability and therefore does not involve any interests and collateral. It’s an asset transaction.

    Second, it’s pretty fast compared to other financing methods. It can be processed and cash can be released in a matter of twenty four hours.

    Third, it helps hasten collections. The advance pertains to the value of the invoice that is yet to be received in cash at a much later date. With a single invoice discounting arrangement, the process is hastened which makes the company more liquid and releases cash locked up within invoices. This also helps strengthen working capital which is good news for any entrepreneur.

  • newbieIn 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.

  • single-invoice-factoringSingle invoice factoring is one of the many methods that allow companies to draw additional cash and capital. It works by advancing the value of receivables prior to their maturity and therefore collection.

    It is deemed popular especially for immediate use and where cash is needed within a short amount of time. It is likewise chosen for its zero debt and no collateral requirements.

    But to truly benefit from single invoice factoring, one has to have a firm grasp about its proper use. That said, here are some do’s and don’ts to help one get by.

    THE DO’s

    • Understand that there are two types to it. Yes and they are factoring and discounting. The two offers the same benefits but they differ by a thin line. Factoring is selling the rights to collect against the invoice while discounting uses them as a form of security, both in exchange for an advance of its value. The former transfers the collection burden to the provider while in the latter, the company retains it.
    • Know your receivables. One has to choose the invoice to use. After all, this is a single or spot procedure that only involves one specific receivable that has been chosen by the company themselves. Therefore, it is one’s job to assess and determine their creditworthiness so as to get an approval.
    • Do remember that you’ve got responsibilities too. In discounting, one has to still perform collection and then repay the provider once the customer pays their dues. When choosing a recourse factoring arrangement, keep in mind that one has to buy back the receivable in case the customer defaults at maturity date.

    THE DON’Ts

    • Don’t jump at the first provider you see. Like anything else, perform adequate amounts of research to find out which providers offer the best services at a fraction of the cost. Read feedback about them and don’t be afraid to inquire.
    • Don’t use it one after the next. It is a onetime transaction which makes the fees very cost-effective as they apply to only one invoice at a time. However, if the company finds the need to use the method repeatedly to the point that majority or all of invoices are factored or discounted, a bulk arrangement would be better.
    • Don’t assume that it’s the same for all providers. There are standards to what single invoice factoring is and what it does. However, certain terms and policies can differ from one financial institution to the next for instance when it comes to rates and fees.

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