The Evolution of Invoice Finance

May 16, 2018

Evolution of IF

Changing the Invoice Finance market

There is a lot of confusion and misinformation around invoice finance. In fact, a great deal of people have never even heard of it. Invoice finance is a way of getting funding by selling your customer’s unpaid invoices. The funder or buyer of the invoices can come in various guises, including banks, companies or private investors (peer-to-peer or P2P).

In Timelio’s case, we connect our network of private investors with businesses selling their invoices via our online marketplace. This has some distinct advantages to both businesses and investors:

  1. It allows businesses to get the best rate of finance available to them, as competition for the invoice has the potential to reduce the cost of funding.
  2. It means that invoices don’t need to be purchased by a single entity, as our marketplace allows the investors to buy in 5% increments.

This means it is unlikely that a business can take on more debt than they can pay back, as they can only ‘borrow’ an amount of money which they are already owed, and when the invoice matures their customer pays the balance owing.

The Evolution of Invoice Finance

Modern invoice finance evolved from factoring (which is why it is still sometimes mistakenly referred to this way), however it has several key differentiators that set it apart.

For example, in traditional factoring, the factoring company would send a Notice of Assignment to their client’s debtors informing them of the update to payment, and that the factoring company will be in control of all their client’s receivables. The factoring company is likely to put facility limits and counterparty constraints on your debtors and factoring companies will generally control the entire receivables process, including collection of debt from late payers, and maintaining the history of payments by customers (i.e. their accounts receivable ledger).

Modern invoice finance, however, is not like this as businesses retain control of their own receivables and have the flexibility to decide what and when to fund. At Timelio, customers have no sign-up fees, account fees, line fees, credit limits or lock in contracts. Additionally, our customer can choose whether to disclose their use of invoice finance or not to their debtors. So if you create an account with Timelio, there is no obligation to fund any invoices ever and you’ll only pay for the funding you receive.  

While ‘invoice finance’ is generally used as a blanket term, it’s worth noting that Timelio’s marketplace also offers export finance and trade finance. In simple English, export finance allows businesses to fund overseas debtors, and trade finance allows businesses to fund without an invoice, but with a purchase order. In today’s increasingly global economy these types of invoice financing can be attractive options.

Timelio’s Marketplace

Timelio’s invoice marketplace offers a unique solution to businesses looking for funding and  gives investors the benefit of being able to access an asset class not previously available to individual private investors.

All transactions conducted on the Timelio marketplace are confidential, and we do not contact our customers’ debtors.

The Timelio Difference

Part of what makes funding with Timelio different is our team. While we are a friendly and approachable bunch, all our staff who participate in seeing businesses get funded are qualified accountants coming from diverse financial backgrounds with experience in some of the largest consulting and finance firms in the world. This experience enables Timelio to work with our customers to achieve the best outcome, as we take the time to properly understand our client’s businesses and their financial requirements, as well as ensuring we find the right type of finance for the client.

These factors not only set invoice finance apart from the funding landscape, but see Timelio stand out as a truly unique offering in invoice finance. If invoice finance sounds like the solution for your business, get in touch with our Growth Manager David Webster (dwebster@timelio.com.au or 0490 228 953) to discuss your needs.

 

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