Boost your cash flow with purchase invoice financing solutions
Transform with Digital
23 Sep 2024
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Boost your cash flow with purchase invoice financing solutions
Maintaining a healthy cash flow is essential for sustainable business growth. SMEs often face cash flow challenges due to limited resources and inconsistent payments from their buyers, which can have a severe impact on financial stability and overall market competitiveness. To address this, more business owners are turning to purchase invoice financing solutions to pay outstanding invoices.
Purchase invoice financing provides businesses with an avenue to meet immediate financial needs, pay suppliers promptly or invest in timely growth opportunities. Businesses can choose to finance all their invoices or specific ones, making it a versatile financing option based on their needs. Approval for invoice financing is primarily dependent on the credit assessment status of the business’ customers.
How it works:
Buyer sends Purchase Order to Supplier for purchase of goods.
Supplier ships goods and forwards the invoice(s) requesting for payment.
Buyer submits financing application form, CTC copy of invoices and transport documents to UOB
UOB makes payment on behalf of Buyer to Supplier
On financing due date, UOB debits Buyer’s UOB account for settlement.
Here is a simple case study to illustrate how Purchase Invoice Financing can work
for you:
Company A, a small trading company, often faces cash flow issues due to the need to pay for inventory upfront before reselling stocks to its customers, who would typically take 30 to 60 days to pay. Company A applied for Purchase Invoice Financing with UOB with the latest supplier invoice and a copy of the Bill of Lading to gain access to immediate funds before payments from its customers were received. At the same time, Company A needed to invest in an IT upgrade that would boost productivity and reduce operating costs by as much as 20%. By financing their payments with Purchase Invoice Financing from UOB, Company A was able to establish financial stability, and be in a better position to invest in technological upgrades that contributed significantly to their business growth.
Benefits of Purchase Invoice Financing for businesses:
Improved cash flow: The most significant advantage of invoice financing is its ability to enhance cash flow. It minimises the impact of long payment cycles from hampering operations or hindering investments in growth opportunities.
Enhanced working capital: Freeing up cash that would otherwise be used to pay invoices upfront means businesses can manage their day-to-day expenses, pay employees on time and negotiate supplier discounts more effectively.
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.
More flexibility: Purchase invoice financing is more flexible than traditional working capital loans, hence it can be a useful alternative for SMEs to save on financing costs.
To find out more on how UOB can support your business growth with Purchase Invoice Financing, click here or book an appointment at a UOB branch of your choice via the UOB SME app.
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