Small business owners have historically had limited business financial opportunities. However, innovative solutions have emerged, especially in the form of invoice Finance Performance through online auction markets.
This market-based working capital solution gives small businesses fast access to working capital currently linked to accounts receivable. Not only can businesses obtain cash quickly and efficiently through this real-time auction process, this form of financing also provides additional benefits. Here are six benefits businesses can benefit from this solution:
1. Full Financial Control – Small businesses have full control over their transactions. The seller sets all the conditions (minimum down payment, maximum discount rate, auction period). Compared to other traditional financing methods, this is a unique selling point for this form of financing and an attractive incentive to use the online borrower marketplace.
2. Quick Access – Sell invoices today and electronically deposit cash advances the next day. This process can be very fast. No matter how many days it takes for the invoice to sell, the invoice will be available within 24 hours of the end of the auction.
This kind of quick access means businesses can take advantage of every opportunity by easily monetizing their outstanding invoices in an easy-to-use receivables market.
3. Certain Restrictions – This online debt marketplace does not require liens, business conduct restrictions or personal guarantees on any assets. Once the company is registered and the sale of outstanding invoices is approved, the only criterion is that the total auction value must be at least $10,000.
4. Access to working capital with no additional debt. This is not a loan. In fact, credit bonds can increase liquidity and improve cash flow without incurring new debt. The only real risk here is that the borrower does not pay.
By selling bonds on this market, you are participating in a “actual sale” of the asset. There is a “return obligation”. This means that if the customer who owes the account does not pay the outstanding invoice, you, the seller, will have to return the remainder…
5. Vendor Flexibility – Submit one or five invoices, but provide the necessary capital to meet your business needs. Visit the auction house once a month, twice a week at a reasonable time.
6. Privacy – Online auction sites protect the privacy of sellers and buyers. The debtor customer is unaware that the invoice has been sold to a third party.
Also because it is an auction format
The seller does not know who received the invoice. The identity of the buyer (a global network of certified institutional investors) remains anonymous.
These six advantages make commercial lending through receivables auction platforms an attractive alternative to other traditional lending methods such as factoring and bank lending when small businesses need to decide where to get a working capital loan.