Account Payable Financing

Unlock working capital from invoices

Call: +65 8336 3133 or Email Contact@Frcapital.sg

Invoicing is done by selling its invoices (customer receivables) with a discounted price and paying the percentage invoice amount to the lender for a borrowing fee when a supplier borrows money from the third party financial enterprise referred to as ‘a factor.’

Two types of Invoice Financing:

Companies that can benefit from factoring are those who have customers with recurring invoice nature on credit terms. SMEs supplying to big supermarket chains or government agencies who usually have long credit terms from 90-120 days are also fit for factoring.

Advantages of Factoring (Invoice Financing):

  • Finance up to 100% of the invoice value of cross-border & domestic trade.

  • Applicable to invoices in different currencies.

  • Simple documentation requirement with quick processing turnaround.

At a glance

• Financing to settle supplier’s invoice under open account* terms.
• We extend your credit term in addition to the credit term given to you by your supplier.

Designed for

• Buyers who have established relationships with their suppliers and prefer to trade on open account
terms.
• Buyers were looking to improve their cash flow.

Funding Overview

Loan Quantum Up to 90% of invoice value
Interest Rate 6.75% – 9.00% p.a.
Processing Fee Up to 2.00%
Repayment Period Usually 30 – 60 days on top of credit term given.

How it works

Your benefits

Our solutions

• In order to save on foreign exchange conversions, pay your suppliers in their local currency.
• Trade in different markets with ease.
• Financing of invoices in different currencies.
• Save time from attending trade
Counters/branch.
• Enjoy faster processing turnaround
the time when you apply
online.
• Be in command of your cash flow with
notification on loan disbursement
& reminders on loan settlement.
• Useful online services:
– Submit applications via DBS IDEAL Trade
or SmartForm.
– Present settlement instructions via IDEAL Trade.
– Receive instant notification when your
loan is disbursed, with an option to be notified
via email, fax, or SMS.
– Receive automated reminders on your
financing settlement due date.
• Ease of getting financing. • Needs simple documentation – invoice &
transport documents to apply for financing,
subject to the existing credit facility.
• Unlock working capital from invoices. • We stretch your credit term based on your
trade cycle.
• Increase cash inflow to grow your
business.
• We fund up to 100% for the purchase of
your goods.
• Strengthen your relationship with your
suppliers.
• Prompt payment to your suppliers.

*Open account trade refers to trade transactions within a seller & a buyer that is not supported by any banking or documentary trade
instrument allotted on behalf of the buyer or seller.

Start Your Application Today!

We help our customers get the proper financial assistance by objectively evaluating their business profile & documents before finding the best financial institutions to give them the highest loan approval odds.

We also try to get the most suitable deal for our clients by looking for the cheapest interest rates in the market, but this could still differ depending on the company’s financial standing & profile.

If your company cannot qualify for a loan, we also advise on what areas you can improve to be eligible in the future.

Get started in 4 easy steps.

  1. Fill up the form & submit
  1. Engaged by our designated consultant
  1. Consultant presents on the proposed business solution
  1. Get your funds upon approval

How It Works

  • In receiving your inquiry, our assigned Business Consultant will get a summary of your business finance.
  • The assigned Business Consultants will brief you on the application process, the best-suited solution, and credit facilities for your company based on your needs during the scheduled appointment.
  • We will assist you with the whole process of your application until approval & disbursement.
  • During the procedure, they might ask for additional documentation required to aid in the application’s approval.
  • For the evaluation, submission, negotiation, and approval of your application, please allow 2 to 4 weeks*.

• If approved, disbursement takes about 3-5 working days upon signing the Letter of Offer.

Fill up the form

What makes us different

Why we are different

How it helps you

• A specialist team of trade practitioners to guide on
the solutions.
• Structure your financing infrastructure for imports around your business cycle, to guarantee the terms
meet your business needs.
• Best-in-class cut-off time for
submission of application settlement.
• More time to submit applications for funding
•We offer a large variety of currencies to help sellers to save on foreign exchange converts in their local currency. • Invoice financing in different currencies.
• Trade in various markets with ease.
• an entirely digitized solution with
IDEAL Trade.
• IDEAL Trade allows you to manage your
needs seamlessly across the different stages of
your trade cycle – from order & production
to shipment, delivery, and settlement.
• It will allow you to submit a trade application conveniently & supporting documents
online and keeps you informed of the application
status via reports and advice.

Find out more today

Partner with FR Capital so you can live more, bank less.
For more information on our products and services, please contact your Relationship Manager or call FR Capital at +65 8336 3133.

Disclaimer & Important Notice

All rights reserved. The applicable laws, regulations, and service conditions govern all services. Not all products and services are available in all geographic areas. Qualification for particular products and services is subject to final determination by FR Capital and its affiliates/subsidiaries.

Accounts payable finance is a new credit form where companies borrow money from a seller to buy goods or services. It is also referred to as commercial credit or seller financing. As for the factoring of invoices, the qualification for payable funding is based on the buyer’s creditworthiness. Most companies have no collateral to put up. However, potential lenders must review their loan history to see if you are eligible for a loan.

Accounts payable financing is an excellent solution for businesses requiring additional working capital. You do not have to take advantage of this kind of funding to purchase additional inventory from your business assets or resources. Additional advantages are:

  • Create and build a good relationship with different providers.
  • Special discounts, bulk discounts, or future special promotions are available. (Sellers frequently choose companies with a long history of payments for their products.)
  • Gain a competitive advantage over other companies.

Accounts payable (AP) is a general ledger account representing an obligation for a firm to pay its creditors or suppliers’ short-term debt. The business department or division responsible for making payments owed by the company to the providers and other creditors is another everyday use of “AP.”

Definition: When a company buys credited goods that must be reimbursed in a short period of time, they are known as payable accounts. It is considered a liability and falls under the heading ‘actual liabilities.’ Accounts Payable is a short-term payment of the debt that you must pay to avoid default.

Description: Accounts Payable shall be a liability on behalf of a particular creditor when ordering goods or services without paying in cash, meaning you have purchased goods on credit. Accounts The term payable is not limited to enterprises. Even people like you and me are payable for charges.

We eat power, telephone, and broadband as well as cable television. The bills are generated at the end of the month or during a specific billing period. This means that the service provider has provided a service and sends the bill that has to be paid by a particular date or that you are defaulting. This will be payable to accounts.

Let’s understand from the point of view of a company, too. You are a company A that buys credit from company B. In 30 days, you must reimburse the raised amount.

Company B will record the same sale as accounts receivable, and company A will record the purchase as accounts payable. This is because company A has to pay company B.

Under the Accrual method, this is regarded as a sale even though money has not yet been exchanged. In processing transactions related to payable accounts, the accounting department should be cautious.

Time is the essence here, given that it is short-term debt that you must pay in a given period. This accuracy, along with the supplier’s name, is the key to the amount to be paid. Precision is necessary because it affects the cash position of the company.

Invoice financing in Singapore is not a new term, especially for small and medium-sized enterprises. Invoice financing in Singapore is a widespread financial solution for companies facing a financial crisis. Factors financing services provide fast funds to help companies to quickly come out and grow their business out of their cash flow problems.

Businesses also use invoice financing To sustain long-term liquidity through slow-payment financing of their invoices. Many companies maintain a long-term relationship with the financing companies. It would help if you chose a trustworthy firm that you finance to function smoothly.

Factoring in the facts means selling, partially or entirely, control of your accounts receivable. It works as follows:

  1. You provide goods or services to your customers in a usual way.
  2. You invoice your customers for those goods or services.
  3. The invoices you “sell” to a factoring company are raised. After checking that the invoices are valid, you are paid immediately by the factoring company, usually up to 80%-90% of the value.
  4. The company is paid directly by your customers. If needed, the factoring company will continue to pay the invoice.
  5. The factoring company is paid directly by your customers. The company factoring chases the payment of the invoice if required.

Factoring is a type of funding that helps to improve the cash flow of slow-paying corporations. This form of financing enables the customer to access immediate funds to pay for business costs and grow.

We show you how the product works in this article. To determine if factoring is correct, we look into all aspects that you must know. You can also find further information when you are new to invoice factoring by reading: “What does factoring matter?”

Your claims are relatively easy to take into account. It is structured by selling your invoices to a company that manufactures. The factor purchases and pays for your invoices immediately. You do not, therefore, have to wait between 30 and 60 days for customers to pay. This gives your company immediate access to funds while your customers are awaiting payment.

Transactions are settled as soon as your customer has paid the factor. In 30 to 60 days, your customer pays their invoices. Factoring companies often fund their invoices regularly. It offers a continuous financing source, improves liquidity, and provides a growth platform.

In two installments, most factoring companies purchase your invoices. The first installment is in advance and covers approximately 80% of the value of the invoice. When you submit an invoice, you will deposit the passage to your bank account. You should note that the advance percentage varies from 70% to 98% based on industry and risk profile. The average progress rate is around 80%.

You will pay the rest of the 20% less adjustment charge once your client pays the total bill. These funds are placed as a second installment on your bank account. The payment pays off the transaction.

Step 1: Choose A Factoring Company

A credible factoring company is the first step towards starting factors. Many factoring companies have to choose from, but you want to make sure that you choose one that meets your business requirements.

When selecting a factoring company, make sure you think about these items.

  • How long has the factoring company been in business?
  • Is it recourse or non-recourse factoring?
  • Have they worked with your industry before?
  • What is the length of the contract?
  • What are the minimum and the maximum amount of invoices you can factor in per month?
  • Are there any hidden fees?
  • Do they offer back-office support such as accounts receivable management and collections?

Step 2: Setup Your Account

Once you select and sign an agreement with a factoring company, you will choose which clients you are interested in. The manufacturer will take due care of the customers you want. The factoring company sets the invoices you wish to factor on a maximum dollar amount from there.

Step 3: Send Invoices & Get Cash

Send the factoring company your invoices. If your factoring company receives the accounts, you directly advance your bank account a percentage of the invoice. We will advise you on your bills once we receive them if you choose TCI Business Capital as your factoring company.

Step 4: Factoring Company Sends Invoices to Your Customer

The factoring company then sends your facts for processing and payment to your customer.

Step 5: Customer Pays the Invoice

Your customer will send payment to the factoring company on agreed terms. The remaining percentage of the invoice is returned to you, except for a factoring tax, once the factoring company receives payment.

Factors are a way for companies to raise money by selling factors at a discounted rate to a factoring company. Credit control services usually take part and help businesses release cash out of their debtor book. All you need to know about factoring in the invoice is here.

Definition

 Factoring is a form of invoice finance for companies that invoice and receive payment on terms. A factoring provider provides you with invoices for your customers so that the majority of invoices can be paid in cash immediately rather than waiting weeks or months to be paid.

Typically, the amount of financing available is a proportion of your remaining debtor book or your sales directory but can be limited by specific conditions like limits on exposure to a single large client.

In general, they will enter your customer paymentsstomer payments into a factoring company-controlled bank account, and your customers will know you use factoring technology. Some factoring suppliers will provide you with the option to loan specific clients or your whole sales directory to minimize your risk of bad debt (this is known as recourse and non-recourse factoring).

Factoring is an invoice financing subcategory. Other forms of financial services include invoice discounting, where you remain in charge of credit control and invoice selective financing.

Risk is one of the critical aspects of corporate finance of any kind. In the view of the lender, factoring is less risky because they control your customers more effectively. This means that factoring is often the favor of low-cost, short-lasting businesses or other challenging circumstances.

Example

 Joe’s Business needs cash flow assistance and is committed to a lender factoring facility. Whenever Joe collects an invoice of S$20,000. And downloads the invoice online. The Invoice Company advances Joe S$15,000. The advance performance rate for the Joe Agreement is 80%.

One potential advantage of factoring, as we mentioned, was credit control. Therefore, the invoice company would, if the customer was late paying what they owed Joe, contact them for his account and remind them that the bill was overdue. In extreme cases, lenders even take legal action if necessary — such services are a significant factor in the promotion of credit control.

When the customer makes payments, the money goes to The Invoice Company, and the rest of the invoice value is paid by Joe to accept the company’s fee. In this example, Joe would generally pay some S$00 in fees and, as soon as the customer paid, he would get around S$3,000. Joe’s client would know that he used a factoring provider as well.

Recourse & non-recourse

Factoring takes the form of invoices for the amount owed to your business, but what happens if a customer fails?

It would help if you absorbed the expenses of the unpaid invoice by using a recourse facility. Instead, the lender would absorb the cost of a non-recourse facility, leaving the business cash flow unchecked. Therefore, lenders often call “bad debt protection” non-recourse because your company is protected against payment failure. But, as you could expect, the factoring facility, in general, becomes more expensive because the lender accepts a higher risk.

The choice between remedies and non-recourses depends on the relationships with customers and the likelihood of your failure to pay. Of course, credit inspection includes factoring — so you will have experienced credit controllers working on your behalf to minimize this opportunity — but it’s important to consider whether the risk of a remedy facility is worth the less.

 Rates & fees

In comparison with the company loans, the cost is calculated somewhat differently. The fees paid are calculated based on how much of your facility is used and the amount of work the lender puts on your account, rather than a fixed monthly payment. Two elements are necessary to take into account the cost of factoring.

There are several factoring advantages, but any potential drawbacks are also worth considering.

Advantages of factoring

Cash flow factoring offers a fast boost. For companies that do not have working capital, this could be very valuable.

Additional benefits:

  • There are many manufacturers, so usually, prices are competitive.
  • It can be an economical way of outsourcing your sales office while you spend time managing the company.
  • It helps to improve financial planning and cash flow.
  • Some customers may respect factors and pay more quickly.
  • Factors can provide helpful information on your customers’ credit standing and help you negotiate better relationships with your suppliers.
  • In planning business growth, factors can be an excellent strategy as well as a financial resource.
  • If you choose to factor non-recourse, you are protected from bad debts.
  • Cash is disclosed once orders are invoiced and available to invest in capital and finance your following charges.
  • Factors can check your customers on credit and help your business with customers of better quality.

Disadvantages of factoring

Questions and disputes can negatively affect your funding available. Factoring works best for an efficient company, therefore, and there are minor disputes and inquiries.

Additional disadvantages:

  • The cost of your orders or service will reduce your profit margins.
  • It can reduce the scope of other bonds– book debts are not secured.
  • Factors limit finance against debtors of poor quality or debtor spread, so you have to manage the fluctuations in financing.
  • You will have to pay any amount you have advanced for invoices if the customer has not paid them yet to complete an arrangement with a factor. Some business planning may be necessary.
  • Some clients may want to deal with you directly.
  • The way your customers deal with the factor will influence your customers’ views. Make sure you use a reputable business that does not harm your reputation.

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About FR Capital

FR Capital is a Singapore consultancy firm that helps SMEs to secure business loans from banks and financial institutions. We concentrate on SME finance, and through our expertise and network, we help clients secure funding with low-interest rates efficiently and hassle-free.