Leveraging Invoice Financing for Business Growth in the Philippines: Grow Without Dilution!
In an emerging economy like the Philippines growing at 6-7% annually, small and medium enterprises (SMEs) are the backbone of the economy. For these SME’s, maintaining a steady cash flow can be extremely challenging. We have heard it first hand from many businesses that loans are difficult to come by around here. This is where invoice financing comes in, offering a unique avenue for businesses itching to grow and capitalize on peak season without getting stuck in the slow and bureaucratic ways of traditional banks.
The Essence of Invoice Financing: Letting the Cash Flow
Think of invoice financing as a tool to turn unpaid invoices into ready-to-use cash. Thankfully, n90 has a ton of these tools to offer! That's invoice financing in a nutshell. This product allows businesses to essentially sell their unpaid invoices to a third party at a discount, in exchange for cash. These loans help keep your business liquid and helps operations run uninterrupted.
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The Philippine Credit Scenario: A Country on the Move
In the Philippines, SMEs contribute significantly to the GDP and employment of the country. This only makes the need for robust financial solutions more obvious. Currently, access to traditional financing for small businesses can be brutal. Very stringent requirements and lengthy processes can really get business owners feeling down.
This is where invoice financing comes into play. This financial product isn’t just a simple loan product alternative, it's a smart financial strategy that aligns perfectly with the unique needs and problem sets of Filipino businesses. Whether you're a start-up in Bonifacio Global City, or a family-run enterprise in the historic streets of Vigan, invoice financing can be the key to driving growth.
How-To: Turning Invoices into Growth
Leveraging invoice financing is very straightforward. Here's how it works:
- Invoice Issuance: You issue an invoice to your client for goods delivered or services rendered. Business as usual.
- Financing Application: Next, you present the unpaid invoice to an invoice financing company like n90, and say, "Hey, can you give me an advance? This customer I just invoiced will pay you back in 45 days.”
- Funds Disbursement: After answering a few questions from the Lender, the lender agrees to advance a significant percentage of the invoice value.
- Client Pays Up: Your client pays the invoice directly to either your business or the lender, depending on the payment terms.
- Settlement: Once the invoice is paid, the lender releases the remaining amount to the SME net of their fees.
The Benefits of Invoice Financing
So what are the benefits from doing this, you might ask?
- Improved Cash Flow: No more cash tied up in receivables. Take the cash flow and use it to fulfill another purchase order, replenish inventory, or simply keep the lights on without any interruption.
- Better Opportunities: With cash in hand, you can take on new business, negotiate stronger terms for your business, or even think spend it on new customer acquisition.
- No Collateral Required: Unlike standard bank loans that force you to pledge assets, invoice financing is tied to your invoice being financed. The invoice is the collateral.
- Flexibility: You choose which invoices to finance. You gain the flexibility to manage your financial needs and cash flow as needed, without the pressure of a business loan.
For SMEs in the Philippines looking for growth opportunities but are stuck in long receivable cycles, invoice financing can become your best friend.
