Invoice Financing (IF) is a product where the sellers (“SME” in this case) assign their current pending receivables or invoices that they have issued to their customers (“Debtor”) to get immediate cash. When the debtors pay these invoices, Investors who invested in these notes would receive the full payment and earn a return.
Tenor is usually 30 - 120 days with bullet repayments of full principal and interests.
SMEs can pay anytime within the tenor and there are no early repayment fees. Investors will receive full interests up till the date of repayment, as the Interest Rates are incurred at a daily rate.
Incurring the Interest at a daily rate is to encourage prompt repayment behaviour from our SMEs, which in turn increases the short term investment opportunities for Investors.
The quicker repayment turnaround time will allow you to reinvest the funds into other investments to generate greater returns.
Our invoice financing listings comprises two types of arrangements:
Types of Invoice Financing
Notified Invoice Financing
In this arrangement, the debtor is informed that the invoice has been assigned to us for the SME to receive financing in advance.
The debtor makes payments directly to our customer’s trust account, bypassing the SME. This reduces the risk of the SME using the funds for other expenses.
Due to the lower risk, notified invoice financing is typically offered at a discount with lower interest rates compared to non-notified invoice financing.
Non-Notified Invoice Financing
Here, the debtor is unaware that the SME has assigned the invoice for financing.
The debtor continues to liaise with the SME and makes payments directly to them. Once the SME receives payment from their buyer, they then repay us.
If the buyer delays payment, the SME remains responsible for the repayment, including any late interest and penalty fees.