For SMEs today, getting access to instant working capital is being offered by a wide range of invoice finance providers. Although this non-traditional method of funding might is not entirely well known to many businesses, it has gained a positive perception over recent years and an increasing number of successful business use cases. Invoice finance provider, Populous World, answers some of the most common questions that first time invoice finance users may want to know.
How important is invoice finance to growing businesses?
The evolving industry of invoice finance is becoming increasingly important to businesses that want to achieve fast growth. Imagine a manufacturing company that has to facilitate large or urgent orders, without cash flow there is no fast way to produce the goods. Their crunch point comes when they need to put cash down at the factory, they need to pay the shippers and need to pay all these bills for the materials to arrive at the end destination.
The cash is needed for inventory, stock and labour and invoice finance is the perfect way to fill any cash flow gaps between the date of invoice to the date in which the customer finally pays, which could take up to 90 days. Without immediate working capital available, businesses become stagnant with no funds to operate.
How does emerging technology help Populous World to facilitate invoice finance?
At the core of the Populous World invoice discounting platform is the Ethereum blockchain technology. The idea behind Populous World is to provide a global, peer-to-peer (P2P) platform built on the Ethereum network that connects borrowers and businesses selling invoices, with lenders and businesses that want to buy them. With blockchain implementation, users can bid on an invoice that is for sale, and the seller decides whom to sell it to; essentially making Populous World a decentralised platform for invoices.
From a technical standpoint, the use of immutable blockchain implementation offers transparency, and significantly reduces the risk of human error or tampering with invoice records, and automated payments on the platform via smart contracts keep everything running smoothly.
There is also an assurance provided by the blockchain that duplicate invoices will not be funded. This is automatically done with the use of smart contracts and does not require small scale invoice investments to be charged further fees for a labour-intensive and costly manual the invoice clone checking process.
Is invoice finance the future of business financing?
Invoice finance has earned a high ranking in the future of finance. Younger generations of entrepreneurs and start ups have realised that this is an innovative and flexible way to grow a business and with more fintech companies offering the service, rates have become more competitive. It is particularly attractive to SMEs that have been told ‘no’ by the banks when applying for a loan or overdraft.
Invoice finance is an effective and smart way to grow your business than just taking on more unsecured debt, which you have to pay back in five years, and which is not linked to any kind of revenue. It also powers businesses to take on larger orders, explore new market opportunities, pay staff, retain good relationships with customers and sustain operations.
>> Is your business in need of fast, short-term financing? Do you need to access cash faster than your customers pay you?