Get a cash advance with sales invoice purchasing solutions

One of the key factors to finding success in today’s fast-paced business environment is maintaining a healthy cash flow. In an earlier article on Purchase Invoice Financing, we talked about how businesses can finance the payments of their suppliers’ invoices in order to pay the suppliers on time while deferring the payment dates.

From a supplier’s perspective, you can also tap on Sales Invoice Financing to leverage unpaid invoices and receive a cash advance from UOB. This cash advance on your sales, typically 70% to 90% of the invoice value after deduction of interest and fees, is particularly helpful when you are required to provide extended payment terms to your customers.

Will Sales Invoice Financing meet my business needs?

To ascertain if this solution is the right one for you, answer the following questions:

1. Do you operate in an industry with long customer payment terms, such as manufacturing, wholesale, or services?
2. Does your business experience cash flow gaps due to delayed customer payments?
3. Are your clients creditworthy and reliable in terms of payment?
4. Do you regularly generate a significant volume of invoices?
5. Is your business in a growth phase requiring additional working capital?
6. Are your profit margins sufficient to cover the costs of financing?
7. Is your business financially stable enough to qualify for financing?
8. Does invoice financing align with your long-term business strategy?

If your answer is "yes" to most of these questions, sales invoice financing might be suitable for you.

How it works:

1. Upon shipment of goods to buyer, the supplier who is also the borrower sends the invoice with payment terms (30/60/90 days after invoice date) to the buyer
2. Borrower submits financing application form, Continuous Transaction Control (CTC) copy of invoices and other supporting documents to UOB
3. After deducting the applicable interest rate, UOB credits the net proceeds of the invoice value to the borrower’s account
4. On the due date, UOB will debit the borrower’s UOB account for settlement
5. (Not pictured: Buyer fulfills payment of full invoice amount to supplier / borrower)

Here is a simple case study to illustrate how Sales Invoice Financing can work for you:

Company Y, a mid-sized company specialising in custom machinery parts, has been experiencing steady growth, with a significant increase in orders from both existing and new clients. However, the payment terms for these orders often extend to 60 or even 90 days, creating a cash flow challenge for Company Y.

Company Y applies for sales invoice financing with UOB for their latest invoice sent to a buyer with a 90 days credit term, and upon approval, receives a significant portion of the invoice value prior to the receipt of proceeds from the customer. With this cash injection, Company Y is able to purchase more raw materials, prepare for upcoming orders and maintain a stable cash position while waiting for the customer to make their payment.

Benefits of Sales Invoice Financing for businesses:

1. Improved cash flow: The most significant advantage of invoice financing is its ability to enhance cash flow, allowing businesses to accelerate their working capital cycle and allocate cash to meet operational needs.
2. Favourable client relationships: Businesses will have the ability and flexibility to offer longer credit terms to customers if they are able to convert invoices into cash before they are due. Favourable payment terms might help you to close deals with larger clients.
3. Maximise growth opportunities: With a reliable source of working capital, businesses can seize growth opportunities, expand operations and invest in other areas like marketing, digital solutions and innovation in new product lines.
4. Scalable financing solution: As a business grows in size, the amount of invoice financing it is eligible for also increases.

To find out more on how UOB can support your business growth with Sales Invoice Financing, click here or book an appointment at a UOB branch of your choice via the UOB SME app.

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