How does single invoice finance work?

The term 'single invoice finance' is often used interchangeably with invoice finance, selective invoice finance, and spot factoring.  We shall use the term: single invoice finance.

Cash for Invoices Limited’s single invoice finance service provides more cash and more time to businesses.

HOW?
More cash by buying invoices (that businesses send to their customers) ahead of the invoice payment date.
More time by buying supplier invoices and collecting payment from the business at a date that’s later than the invoice payment date.

MUST I PROVIDE SECURITY?
No security such as a debenture or other charges or personal guarantees, is required,

AM I COMMITTED TO SELL INVOICES?
There is no commitment and no facility so no arrangement fee and no exit fee or service charges

WHAT VALUE INVOICES WILL YOU BUY?
Cash for Invoices Limited’s single invoice finance service buys invoices from just £250, and up to £25,000 (or more).  They must be denominated in £, $, or €

​HOW MUCH WILL IT COST ME TO SELL AN INVOICE?
Cash for Invoices Limited charges ONE fee, currently just 2.5% of the invoice amount plus VAT on the fee).

​HOW MUCH WILL IT COST ME TO SELL AN INVOICE?
Cash for Invoices Limited charges ONE fee, currently just 2.5% of the invoice amount (plus VAT on the tee) .  ​Contact Cash for Invoices today for a free and no-obligation quote.

​WHAT TYPES OF BUSINESSES SECTORS AND BUSINESSES ARE ELIGIBLE FOR SINGLE INVOICE FINANCE?
Most sectors will be eligible for invoice purchase by Cash for Invoices Limited, however ineligible sectors include tobacco, alcohol, armaments, and betting.

Most legal types of businesses are eligible, including sole traders, SMEs, partnerships, charities, and social enterprises

WILL THE INVOICE BE SOLD BACK TO ME IF THE DEBTOR FAILS TO PAY?
No.

​CAN I SELL YOU AN INVOICE THAT IS OVERDUE?
No.

​WHAT IS THE RETENTION FOR?
Cash for Invoices Limited’s single invoice service deducts a retention of up to 10% of the invoice amount, to cover the credit risk of the debtor.  This is paid to the seller provided the debtor pays Cash for Invoices Limited in full and on the due date.  The retention is not a payment by the supplier but a deduction from the purchase price.

​CAN SINGLE INVOICE FINANCE BE USED TO BUY MY SUPPLIER’S INVOICE?
Yes, Cash for Invoices will consider buying your supplier’s invoice.  In that case, the supplier will be the invoice seller and you will be the debtor, and you pay to Cash for Invoices Limited not to the supplier.

​CAN YOU EXTEND THE DUE DATE FOR PAYMENT OF MY SUPPLIER’S INVOICE?
 Yes, for some supplier invoice purchases, Cash for Invoices Limited will agree to give you more time to pay. (up to 60 days after the invoice payment date)   The extension will be agreed with you before the invoice is purchased off your supplier.

​WILL MY CUSTOMER (MY DEBTOR) BE AWARE OF THE INVOICE SALE?
Yes.  You will need to notify the customer of the invoice sale and obtain their signature acknowledging the sale​.

Cash for Invoices Limited’s single invoice finance service provides more cash and more time to businesses

​For a free no-obligation quote on selling an invoice contact Cash for Invoices Limited.

Re-cap:
What is an invoice?
Invoices are a form of trade receivable, i.e., they are an asset on a company's balance sheet representing money to be received by that company at some future date - at the time the debtor pays the invoice.   At that time, the debtor (payer of the invoice) will no longer appear on the company's balance sheet and instead it will be replaced by an equal amount of cash (which is also an asset).  There is no net increase or decrease in assets, merely conversion from one to another.  

Bad debt?
If that debtor does not pay, then the asset will be written off as a bad debt (a cost in the profit & loss account) and assets will then reduce (no cash came in). Granting time (credit) to buyers to pay for their purchases is therefore an example of credit risk for the company giving time.

If later - perhaps through credit collection procedures - the debtor pays the invoice, then the bad debt is added to the p&l as a profit (income) and cash increased by the amount received.  The assets increase and are offset by an increase in profit (equity on the balance sheet).  All is well again.

Selling an invoice to Cash for Invoices Limited
Before the debtor defaults, the company can sell the invoice to a company such as Cash for Invoices Limited that will offer to buy just one invoice when the company wants to sell.  There is no commitment for the company to sell, and no commitment for Cash for Invoices Limited to buy.  The company wants to exchange an invoice for cash - perhaps it needs the cash sooner than the invoice payment date.

Cash for Invoices Limited will make an offer after conducting due diligence on the selling company and on the debtor especially.  The debtor is a key concern for Cash for Invoices Limited because if there is a subsequent default then Cash for Invoices Limited will not require the seller to buyback the invoice.  The sale is therefore non-recourse and Cash for Invoices Limited has to suffer the consequences of a default.  It will commence steps to recover the debt.  These can include issuing letters for payment, appointing a solicitor, making a court claim, or making a claim under a credit insurance policy.  

Retention to mitigate credit risk
To mitigate the potential costs of trying to recover payment on an invoice that Cash for Invoices Limited purchased but which goes into default, Cash for Invoices Limited will retain up to 10% of the value of that invoice from the purchase price.  If there is no default (the debtor pays the invoice on time and in full) then Cash for Invoices Limited will pay the retention to the seller when the debtor pays the invoice.

Features of single invoice finance offered by Cash for Invoices Limited
In addition to being non-recourse, Cash for Invoices Limited does not require a commitment from the seller to sell all its invoices, nor will Cash for Invoices Limited charge an arrangement fee for a purchase.  Cash for Invoices Limited will not ask for ongoing fees because there is no facility between the seller and Cash for Invoices Limited. The transaction is entered into whenever the company needs cash and Cash for Invoices Limited agrees to purchase the single invoice or multiple invoices.  Compared to bank factoring facilities, Cash for Invoices Limited's single invoice finance service is far more simple and has no tie-ins and far fewer fees, just one.
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Supplier invoice finance offered by Cash for Invoices Limited
Cash for Invoices Limited also helps companies who need more time.  Why do they need more time? Because suppliers who have sent them an invoices are demanding payment but the company needs more time to pay.

In such situations, Cash for Invoices Limited can offer to buy the supplier single invoice for cash.  That cash is paid to the supplier not to the company Cash for Invoices Limited is helping.  Having got the supplier off the company's back, Cash for Invoices Limited allows the company the extra time it needs to get cash and then to use that cash to pay Cash for Invoices Limited for the supplier invoice Cash for Invoices Limited purchased.

Cash for Invoices Limited's single invoice finance service therefore helps companies (sole traders and SMEs) who either need cash or who need more time.

To find out more about Cash for Invoices Limited's single invoice finance service contact  Cash for Invoices Limited.