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Unlock the Potential of Your Unpaid Invoices with OCBC Short-Term Invoice Financing
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Disclaimer: The insights shared in this article are the result of a collaboration between OCBC and Smart-Towkay.com. It's essential to note that all views expressed in the article are the independent opinion of Smart-Towkay.com, which is based on our thorough research and industry expertise.
Smart-Towkay.com cannot be held responsible for any financial losses that may occur as a result of any transactions, and we strongly encourage readers to conduct their own research before making any financial decisions.
Cash flow is critical to success in today's fast-paced business world. Even the most successful companies can find themselves in a cash crunch as a result of unpaid invoices. In this case, invoice financing comes into play. Invoice financing, also known as accounts payables/receivables financing, enables businesses to access funds held in unpaid invoices.
One option for invoice financing is OCBC Short-term Financing. It is a flexible and convenient way for businesses to access working capital and improve cash flow.
With OCBC Short-term Financing, businesses can borrow up to 80% of the value of their unpaid invoices, which can be a valuable source of funding for businesses of all sizes.
This type of financing provides a solution for companies that have a gap between the time they issue an invoice and when they receive payment, allowing them to bridge that gap and keep their cash flow positive.
It's important to note that invoice financing is not a loan and it's not a credit line, it's a funded facility that allows SMEs to turn their unpaid invoice into cash.
It's a non-traditional way of financing that can help businesses get the cash they need quickly, without waiting for their customers to pay.
In this blog post, we will delve deeper into the benefits of invoice financing, specifically OCBC Short-term Financing, and how it can help businesses unlock the potential of their unpaid invoices and improve their cash flow.
Difference Between using OCBC Short-term Financing as a seller and buyer
With this type of financing, the bank assumes responsibility for making payments to your suppliers or your business.
*With OCBC Short-Term Financing, the buyer can secure funding from a bank to cover their purchases. The bank then directly dispenses payment for these items to the appropriate suppliers. Afterward, the buyer themselves will then pay the banks to pay off their debt with interest at a mutually agreed date. Suppliers can either be providers of goods or services.
On the other hand, as a seller or supplier, your business can get paid in advance or get access to cash before your customers pay for their goods.
With this type of financing, the bank provides a cash advance against your sales invoices, and you are still responsible for collecting payment from your customers.
Typically, the duration of your financing will match the invoice's maturity depending on your credit terms with your customers on the due date, the borrower will need to pay the lender the advance as a lump sum.
Benefits of OCBC Short-Term Financing Vs Business Term Loan
Flexibility – OCBC Short-Term Financing offers more flexibility compared to a conventional business term loan. Rather than receiving the funds in one lump sum with fixed payments which is the case for business term loan, businesses can use OCBC Short-Term Financing to advance their future sales proceeds against their outstanding invoices as they come in without being constrained by a set repayment schedule. Repayment is made at the conclusion of the financing tenor.
Increased Borrowing Capacity: Businesses can boost their borrowing capacity without taking on more debt or equity by accessing advanced cash from their unpaid business invoices using OCBC Short-term Financing. By doing this, businesses may be able to acquire more cash than they otherwise could through established bank loans.
Alternative Funding – OCBC Short-term Financing can be a wise choice for established enterprises that do not wish to be restricted by a specified repayment schedule for their working capital needs because the payback is made at the conclusion of the financing tenor.
Relationship – One of the best things about OCBC Short-term Financing is that it helps you keep your existing supplier happy. Since you'll be able to pay them faster, you might even negotiate a discount with your supplier by paying them earlier and retaining their loyalty.
OCBC Short-term Financing also allows your business to offer extended payment terms to your buyer which may lead to increased sales and client loyalty.
Scalability – If you are a small business owner, large and established suppliers typically require fixed payment terms that cannot be negotiated.
OCBC Short-term Financing provides buyers with the financial resources to meet these demands while allowing you to keep more working capital for your own use.
This gives business owners confidence when dealing with larger providers and allows them to confidently purchase goods without worrying about cash flow or liquidity issues.
OCBC Short-term Financing also known as Invoice Financing
OCBC Short-term Financing is a financial product offered by OCBC to help businesses meet their short-term funding needs.
OCBC Short-term Financing might be an appealing alternative for businesses searching for a rapid and flexible financing solution to handle their short-term financial needs, whether you are acquiring or selling products and services.
OCBC Short-term Financing is suitable for business owners who want to use quick cash for working capital needs, or trade and receivables finance. It is also suitable for businesses that want to:
- Pay suppliers on time;
- Take advantage of early payment discounts from suppliers;
- Purchase inventory or raw materials in bulk; and
- Meet unexpected business expenses or emergencies
Eligibility for OCBC Short-term Financing - Invoice Financing
Business is registered and operating in Singapore for at least 2 years (Business that is less than 2 years will be considered on a case-by-case basis)
At least 30% owned by Singaporean or Singapore PR
Documents Required For Submission
Latest Years Of Company Financial
Latest 2 Years of guarantor's Notice of Assessment
Up to 80% of invoice value
Non-notified basis i.e your supplier or debtors will not be aware that OCBC is financing your purchases or sales
As low as 0.6% per month
How To Apply
To apply for OCBC Short-term Financing, explore the official website here.
You can request a quote on how much funding you will be eligible as the very first step. Once the application has been approved, you can start uploading your unpaid invoices on OCBC Velocity and receive the funds within one working day if invoices are uploaded before 4:30 pm SG Time.
Conclusion: The Bottom Line
In conclusion, OCBC Short-term Financing can be a valuable tool for businesses struggling with cash flow issues due to unpaid invoices. By providing quick access to cash locked up in receivables, businesses can meet their immediate cash flow needs, pay suppliers and employees on time, and continue to grow and expand their operations.
This can be especially beneficial for businesses looking to expand operations, invest in new equipment, or take advantage of early payment discounts from suppliers.
With the easy application process, businesses can get approved for a loan in a short amount of time. However, it's to remember that invoice financing typically comes with fees and interest.
If you'd like to learn more about how OCBC Short-term Financing works, check us out and get a free consultation on the subject.
Frequently Asked Questions
What are the terms notified and non-notified when you apply for Invoice Financing as a seller?
When a bank informs a borrower's customers that their invoices have been sold and that all future payments should be made to the bank, this is known as notified invoice financing. This means that the customer is aware of the factoring arrangement and will pay the bank directly.
Non-notified invoice financing, also known as confidential factoring, is when the bank does not inform the customer of the factoring arrangement. The customer continues to make payments to the business, and the business then forwards the payments to the bank. This means that the customer is not aware of the factoring arrangement and will continue to make payments to the business as usual.
The level of transparency provided to the customer is the primary distinction between notified and non-notified invoice financing. Customers are aware of the factoring arrangement and will make payments directly to the bank with notified invoice financing, whereas customers are unaware of the factoring arrangement and will continue to make payments to the business as usual with non-notified invoice financing.
Can I use OCBC Short-term Financing to pay off my debt?
OCBC Short-term Financing, also known as invoice financing, is a great way to gain access to short-term working capital quickly and can be used as a solution for paying off debt.
Businesses can get advanced cash against their outstanding business invoices to provide the immediate funds necessary for tackling any debts they may have incurred. However, it's important not to rely solely on OCBC Short-term Financing as an ongoing long-term debt strategy -- use it wisely and only when absolutely necessary!
Although invoice financing may carry fees and interest, it is essential to remember that not repaying the loan in a timely manner can have significant ramifications on your creditworthiness and future financial prospects.
Is there any collateral requirement for OCBC Short-term Financing?
No collateral is required but a personal guarantee (PG) is needed. PGs are different from collaterals. They are a promise by the business owner to repay the loan if the business fails. Hence, a PG is required as it guarantees the bank that they will be able to recover at least some of their losses even if the business goes bankrupt.
Is there a minimum and maximum loan amount for OCBC Short-term Financing?
The minimum and maximum loan amounts will vary depending on the value of the unpaid invoices and the profile of your customers/suppliers and the bank's credit assessment of your company.
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