What is Invoice Financing
Invoice Financing also known as Invoice Discounting, refers to the loaning of funds against the outstanding account receivables. You will receive a portion of the unpaid invoices usually 80% , in a form of Loan or Line Of Credit. Upon receiving payment from your clients. You will then pay the lender back the amount loaned with a one time fee of 1% and interest as low as 1%.
Example of Invoice Financing
Your’e a wholesaler of a restaurant. You sent a $10,000 invoice of ingredients and equipment to the restaurant that you sold to them. The terms of this invoice is to be paid within 1 month. However, the month of collection your company experienced faulty machinery and you require an immediate financial support and you need financial support to pay up for this unexpected emergency. Hence you approach invoice financing provider for an advance payment. (E.g 80% of the total invoice - $8,000)
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