Invoice factoring is a great way for companies to free capital locked up in accounts receivable. By selling invoices to an invoice financing company (known as a factor), a company can immediately claim the majority of the outstanding invoiced amount (roughly 80–95%) and then receive the rest, minus a percentage of the total amount and fees charged by the factoring company, once the invoice is paid by the customer.
The factor will usually keep a percentage of the invoiced amount which will vary based on the length of the invoice payment terms (30, 60 or 90 days) with the amount kept by the factor increasing with the age of the invoice.
An invoice paid within 30 days will incur a smaller percentage than an invoice paid within 90 days. It’s also good to note that the invoice factoring market is valued at almost $3 Trillion USD and used by from small and medium-sized enterprises to fortune 500 enterprises.
Let’s say you are a company who has invoiced a customer £10,000. After enlisting a factoring company, who will verify both your organisation and the customers you are invoicing, the factor will advance you 80% of the invoiced amount or £8,000. If the factor charges a 5% per month and your customer pays within 30 days, you will receive £1,500 and the remainder (£500) will be kept by the factor.
What Invoice Factoring services are available?
At factoring companies like Populous World, an invoice discounting service is provided for SMEs which offers funding solutions using blockchain technology, to offer speed, transparency and flexibility, allowing global investors to participate in the funding of an invoice.
If you are currently in the search for an invoice financing company, here are some quick steps on how to finance your outstanding receivables.
Selling invoices on Populous World is easy! Just follow these 5 simple steps:
1. You provide sale of goods or services to your customer.
2. Upon verification and risk assessment, provide the invoice that will be payable to ‘Populous World’ to your customer.
3. Upload said invoice onto our platform which then invites invoice buyers to bid on your invoice.
4. Receive the cash flow within 24 hours of the auction closing without interest fee.
5. Upon repayment, the customer repays the invoice by making a full payment to ‘Populous World’.
>> Is your business in need of fast, short-term financing? Do you need to access cash faster than your customers pay you?
Populous World is an Invoice Finance provider that unlocks working capital for UK businesses.
Bridging your business’s cash flow gap is something that Populous World excels in delivering, providing you with the funding tools to grow and sustain your business.