Invoice Financing
Releasing cash from unpaid customer invoices instead of waiting for the due date.
Overview
Invoice financing lets a business obtain funds against invoices that its customers have not yet paid. Depending on the structure, the financier may advance a percentage of the invoice value, then pay the balance (less fees) when the customer pays. It can ease cash-flow pressure for businesses with long payment cycles.
How it generally works
- The business issues an invoice to a customer for goods or services delivered.
- The invoice and supporting documents are submitted to a financier.
- The financier verifies the invoice and the customer, then decides whether to advance funds.
- When the customer pays, the financier settles the remainder, less its charges.
Potential business use cases
- Businesses that sell on 30-, 60-, or 90-day credit terms.
- Companies that need to pay suppliers before customers pay them.
- Growing sellers whose sales outpace available cash.
General documentation
Requirements vary by transaction, country and institution. Commonly requested items include:
- Invoices and proof of delivery or acceptance
- Contract or purchase order with the customer
- Aged receivables list
- Company registration and bank statements
- Customer details for verification
Important considerations
- Fees reduce what the business finally receives.
- The financier will assess your customer's reliability, not only your own.
- Terms vary widely, and funding cannot be assumed.
FAQs
Is invoice financing the same as a loan?
It is a financing arrangement secured on invoices rather than a conventional loan, though it still involves costs and obligations.
Will my customers know?
It depends on the structure. Some arrangements are disclosed to customers and others are not.
Ready to discuss your trade requirements?
Send us an inquiry or speak to our Kano office directly. We will take you through the options and the requirements, step by step.