While strong company financials and a good credit rating may get you a nice credit line with attractive interest rates from traditional financiers, invoice financing uses a slightly different approach for assessing your application.
Invoice Financiers focuses more on the ability of your customers to repay, also known as your customers’ payment rating. This makes invoice financing a favourable option for smaller SMEs who may not have long credit history but are dealing with large, stable companies.
Let’s go through the 7 ways that you can improve your invoice financing application.
1. Provide all requested documents upon Invoice Financing application.
In order to improve any application process, the general rule of thumb would be to ensure that all requested documents are provided upon application. This will reduce the amount of correspondence for the absent documents.
These documents should also be of a certain standard format, especially for financial information like management accounts, financial statements. Submission of these documents by an Excel worksheet would not be acceptable.
InvoiceInterchange can provide an assessment outcome within 24 hours upon receipt of all required documents.
2. Be clear of your funding needs
It is very important to understand your need for invoice financing. We have mentioned a few examples stated below:
1. How often would you require invoice financing?
2. Are your customers are taking too long to pay and you have expenses to clear?
2. To utilise the additional working capital to handle sudden influx of projects?
3. To improve cash flow temporarily in an economic downturn?
Invoice Financiers also assess companies based on the historical and current revenue.
Ensure you communicate this information to your financier.
3. State your customers (debtors) to obtain invoice finance from.
Do ensure the application clearly states the customers that you wish to obtain invoice financing from. As mentioned above, invoice financing focuses more on the ability of your customers to repay which will be determined by your customers’ company size and stability.
In general, multinational corporations (MNCs), government bodies or publicly listed companies are ideal customers to obtain invoice financing from.
4. Provide clear Information on invoice
Please ensure that the following information is stated clearly in your invoices:
- Invoice ID
- Purchase Order ID
- Invoice date
- Invoice due date
- Your business name and address
- Customer’s name and address
- Detail of goods/services are clearly stated
- Final Invoice amount
This vital information will show that you are on top of your collection process and have established a payment process with your customers.
5. Be upfront about your current credit facilities
As part of credit assessment, the invoice financier may request information of the company’s current credit facilities. It will be a big red flag if the company does not report all current credit facilities.
6. Improve your company’s credit score
Ensure you are up-to-date with your company’s credit score and try to improve it. Items that are difficult to re-mediate are below. So be sure to stay away from:
- Bankruptcy proceedings
- Litigation records
- Default records (when a financier writes off your debt)
7. Building your online presence
Most credit assessments are beginning to include online analysis of the company. It is recommended to have an online presence like a company website, social media (e.g. Facebook, twitter, Instagram, Youtube, Linkedin), Company registration (e.g. Yellow Pages, The Green Book).
If you do not have a company website, it is highly recommended to build one. There are many free tools to help you build your website (e.g. WordPress, WiX). This in turn, will probably help your business grow as well in terms of marketing exposure.
InvoiceInterchange offers an online invoice financing solution, obtain approval within 24 hours. Talk to us today to find out more.
