SME Invoice Financing In Singapore – A Growing Trend

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Small and medium-sized enterprises or SMEs are becoming one of the driving forces behind the economic growth of Singapore. Invoice financing has become a new rising option for many businesses and SMEs in the country. While invoice financing is not a new means of growth capital, the growth of technology and data has also played an essential role in driving financial inclusion among SMEs.

What in invoice financing?

Invoice financing helps the business improve their cash flow, pay salaries to the employees and make payments to the supplier, reinvest in operations before they could, if they have to wait till their customers have paid the balance.

In order to exchange, a business entity submits its invoices to the lending party. The lender collects the payments once they are due. This service is offered for a short period of time ranging from 15 days to a year. Invoice financing is considered less risky for the people who are lending than other short-term financing options available. Interest rates are also generally lower than other short-term loans.

Who can apply for invoice financing?

  • Any business-to-business company
  • A company with pending purchase orders or invoices
  • Any business entity incorporated and formed in Singapore

The benefits of invoice financing

There are a lot of benefits of SME invoice financing in Singapore. Some of the benefits are as follows-

  1. It helps in better cash flow. In voice financing allows the cash to get freed up by enabling it to be sold at a discount instead of waiting for days before payment gets done.
  2. The companies can use this cash to invest in the company to create more profits and have future expansion.
  3. Invoice financing help in keeping the credits of a business low. This way, the companies don’t go into debt. They do not have to worry much about their credit sheets.
  4. Invoice financing helps in providing alternative funds. When the cash runs low in a business, a business is likely to suffer. The invoice financing grants loans that keep a company running and functioning smoothly.
  5. Immediate access to then monetary funds.
  6. It helps a company stay competitive and fight its competitors without having a setback.
  7. Invoice financing eliminates cash flow gap.
  8. Investors stand a benefit from this process as they can choose to finance any outstanding invoice of an SME and get the interest on their investment.