In the dynamic world of international trade, exporters often face challenges related to cashflow and payment delays. Single invoice finance emerges as a powerful solution, allowing businesses to unlock funds tied up in invoices quickly. Each invoice can be funded up to a predetermined limit, providing exporters with immediate access to cash. This funding mechanism is particularly beneficial when invoices are presented to repeat businesses with the same debtor, as it streamlines the financing process and builds a reliable cash flow.
This blog will explore what single invoice finance is, how it works, and its benefits for exporters.
What is Single Invoice Finance?
Single invoice finance is a funding method. It lets exporters get immediate cash for a specific invoice they have raised. Unlike traditional invoice financing involves the whole ledger being considered for funding, this method focuses on single invoices. This makes it a flexible choice for businesses that need quick access to money fast!
How Does Single Invoice Finance Work?
The process of single invoice finance is straightforward:
1. Invoice Creation
The exporter issues an invoice to their overseas customer for goods or services rendered.
2. Application for Finance
The exporter approaches a finance provider to secure funding, secured against that specific invoice.
3. Verification
The finance provider verifies the invoice and the creditworthiness of the foreign customer.
4. Assignment of Invoice
The exporter formally assigns the invoice to the finance provider. This means the finance provider now has the right to collect payment directly from the customer.
5. Advance Payment
Once approved, the exporter receives a percentage of the invoice amount (typically 70-85%) as an advance against the amount due and payable by the customer.
6. Customer Payment
The overseas customer pays the full invoice amount directly to the finance provider on the invoice due date.
7. Final Settlement
After receiving the customer payment, the finance provider deducts their fees, settles any outstanding advance, and remits the remaining balance to the exporter.
This method of invoice financing helps exporters keep cashflow steady. They do not have to wait for customers to pay. Payments can take 30, 60, or even 90 days. At Newable Commerce, we offer single invoice finance for up to 180 days.
What are the Benefits of Single Invoice Finance for Exporters?
1. Improved Cash Flow
Exporters can access funds tied up in outstanding invoices. This helps the exporter manage their working capital better. With these funds, they can ensure they have the resources needed to operate and grow their businesses.
2. Flexibility
Exporters can choose which invoices to finance, allowing them to tailor their funding needs based on their cashflow requirements.
3. Reduced Risk
– Funding relies on the creditworthiness of the overseas customer.
– Exporters can lower the risks of non-payment.
– They can also reduce the chances of late payments.
4. Quick Access to Funds
The process is usually quicker than traditional bank loans, allowing exporters to react swiftly to market opportunities or unexpected expenses. Once a debtor is approved, the timeline for funding is quite quick, provided the invoice is within terms. This efficiency ensures that businesses can maintain their cash flow and seize opportunities without delay.
5. Support for Growth
With better cashflow and less financial stress, exporters can invest in new projects. They can also expand their operations or explore new markets.
6. No Long-Term Commitments
Single invoice finance does not need long-term contracts. This makes it a great option for exporters who may not need ongoing funding.
Single invoice finance is a useful tool for exporters. It helps them improve their cashflow and manage their finances better.
By using single invoice finance, also called export debtor finance, businesses can access the value of their invoices. This helps them get the funding they need to succeed in the competitive world of international trade. Whether you’re dealing with foreign customer funding or navigating the complexities of overseas project finance, understanding and utilising single invoice finance can significantly benefit your exporting business.
If you are thinking about this financing option, it is important to assess your needs. You should also talk to a finance provider that can help you find the best solutions for your business. With the right approach, single invoice finance can be a game-changer for exporters aiming for success in the global market.
How Newable Commerce Can Help with Single Invoice Finance for Exporters?
Newable Commerce aims to simplify international trade for the UK’s roughly 300,000 exporting SMEs.
“Simplifying international trade” is the core principle that guides everything we do at Newable Commerce. We’re not just tackling current problems; we’re completely rethinking what trade finance means.
Our goal is to change how customers view trade finance. We want to show that it can be simple and efficient. We aim to set a new standard for the industry.
Newable Commerce exists to simplify international trade for SMEs. We offer various products and services. These help businesses move and manage money internationally. They also improve cash flow with our working capital debt products.
Newable Commerce offers tailored solutions for exporters looking to leverage single invoice finance effectively. We offer funding for payment terms of up to 150 days. This helps businesses access working capital tied up in overseas invoices.
Newable Commerce offers competitive rates starting at 1.7% for 30 days. This service helps exporters get up to 90% of their invoice value right away. This provides quick cash flow to cover production costs and other expenses.
We help small and medium-sized enterprises (SMEs) with export finance. This support allows them to handle international trade confidently. They can manage foreign customer funding and overseas debtor working capital more easily.
By partnering with Newable Commerce, exporters can grow their business. They can also enjoy flexible and efficient financing solutions.
