Many SMEs in Singapore can agree that borrowing is now increasingly affordable and unobtainable. But in such a turbulent economy, businesses need to be able to access cash fast and quickly to boost cash flow. Keep in mind poor cash flow management is the biggest killer of SMEs in Singapore.
With trust in high street banks dwindling, SME interest in alternative financing is now becoming prominent. In the wake of this, we take you through some of the reasons behind the increasing popularity of invoice financing in Singapore.
Easier Qualification
There’s no denying that securing a loan across traditional lending formats is now becoming difficult. SMEs are making do with a widespread increase in rejected applications in Singapore for all loan categories. In this regard, the vast majority of them tend to count on external financing to fund their operations, expand their businesses and invest in new projects.
But what if your loan application is constantly rejected? When this happens, invoice financing offers businesses with a more assured way of gaining financing when they need it more. As opposed to bank loan applications, applying for invoice financing is pretty straightforward.
Bolsters Relationships
By taking advantage of invoice financing, you can offer more flexible payment terms to your customers. Rather than demanding payment upfront, business can provide longer repayment terms while still getting a cash injection from a third-party financier. This newfound flexibility can help ensure your business’ forges long-lasting relationships with customers and built trust.
The thing with invoice financing is that it helps ensure SMEs foster positive relationships with customers and suppliers. Keep in mind maintaining a healthy relationship with your suppliers is vital for the smooth operation and success of your business.
Reduced Risk
Among the greatest benefits of invoice financing is that it reduces a business’s exposure to bad debt by assuming the burden of credit control. When a business leverages invoice financing, the financing company takes on the responsibility of collecting payment from the customer’s buyers whose invoices are being finances.
What this simply means is that the payment is collected from the buyer rather than the supplier. The financing company will undertake credit control activities such as credit assessment, invoice verification and collection efforts and will protect suppliers from non-payment. No wonder the popularity of invoice financing companies in Singapore seems to be increasing almost every other day.
