At What Point Can You Finance An Invoice In A Transaction?

 In Debtor Finance, Invoice Factoring, Invoice Finance

Why can’t we pay your invoice as soon as you’ve produced the goods and shipped them off?

You’ve done your part. Your good to go right?

Well not really. It’s not over ’til the fat lady sings. There are a number of factors that must be considered.

Watch the video below (or read the transcript) to find out why.

To book in an  appointment with a product specialist call the office on 1300 652 158


Julia: Hi everyone. Julia from AR Cash Flow here. Hi, Daniel.

Daniel: Hi.

Julia: Thanks for joining us again for one of our educational videos.
Today we’re going to cover a topic which is: Why can’t you
finance an invoice as soon as it’s been shipped?

So Daniel, let’s take it away.

Daniel: It’s a good question. I get asked that question a lot, and it
goes back to the fundamentals of invoice finance. The reason why
invoice finance works for particular companies is because what
we rely on is the credit of the customer, and we’re financing .
. .

Julia: Not the credit of the client?

Daniel: Not the credit of the customer. We’re financing short-term
assets, which are receivables or invoices, more to the point. So
in order to finance an invoice, we need to confirm that that
invoice is real and exists and is going to be paid effectively.
It doesn’t happen in such a clunky fashion in reality. But
that’s really what the heart of invoice finances are about.

Julia: So until it’s been received and verified by the customer, it
doesn’t really exist.

Daniel: From our point of view, correct. And the reason why that’s so
important is because if you want us to finance an invoice before
you’ve delivered it and you’re just giving us the shipping
documents, how do we know what’s actually been put into the
container and then shipped until the end customer tells us what
they’ve received?

So really that is what’s called a pre-billing or billing in
advance from our point of view. As we said before in other
videos, it’s not really eligible for invoice finance, although
we do make some exceptions with particular types of clients. But
the reality is it’s actually trade finance.

Julia: Okay. Excellent. Thanks, Daniel. If you’d like an appointment
with a product specialist, call the office on the 1300 number.
Thanks guys.

Daniel: Thanks for watching.

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