“We cannot do anything to change how we use credit terms in business. However, there is something that we can do with unpaid invoices.
We call it invoice financing.”
A study done by the largest credit insurer in the world revealed that Singapore has the highest number of unpaid invoices in the Asia Pacific countries. This poses a great challenge to the businesses in Singapore as late payment will cause their cash flow to be affected and leading them into debt and bankruptcy.
Therefore, with invoice financing, businesses have the option to sell their unpaid invoices to financial institutes at a discount. This enables businesses to improve on their cash flow even though the client’s payment for the invoice is still 60 or 90 days away and allows them to receive funds immediately. With improved cash flow, businesses can offer better payment schedules to their clients and in a way keeps their company competitive as it attracts more clients.
Moreover, invoice financing also helps to keep the credit low and hence businesses do not have to worry about their debt level is too high to borrow a large business loan.
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