What is invoice factoring
Hiveterminal uses invoice factoring so that SMEs can release the cash from as yet unpaid invoices. In order to explain how invoice factoring works check out the animation or cartoon strip.
What is invoice factoring
What is invoice factoringInvoice factoring lets businesses raise cash from their unpaid invoices by selling them to a 3rdparty through Hiveterminal.
Why would a business sell its invoices?If you are a small/medium sized business (SME) some of the most profitable work you do can be for larger companies. Whilst they pay well, big companies can have very bad payment terms, meaning SMEs can wait a long time to be paid. So rather than have to wait, the SME can sell their invoice to an investor who gives you the cash straight away (i.e liquidity).
How do I sell an invoice on Hiveterminal?
This is restricted to Slovenian SMEs for now, but it’s very easy for a business to sell an invoice on Hiveterminal:
- Sign up for a Hiveterminal account here
- Once registered, upload your invoice
- Hiveterminal works out a discount based on its algorithm and a number of other key factors
- The business agrees to the discount rate and makes its invoice available for purchase
What are the advantages of invoice factoring with Hiveterminal
Invoice factoring provides a quick way to improve cash flow. If you have big customers with poor payment terms, this can provide a welcome relief.
You don’t need to wait for your customer to pay. Once your invoice has been sold, the cash you receive can be cleared and in your business bank account within 24 hours.
No banks are required to intervene, which means a quick and simple process for everyone involved.
There is no need to tie up other assets as security either. The security is the invoice itself and the data around it, so the process couldn’t be easier.
What to be aware of when selling your invoice on Hiveterminal
As with all factoring services, you will not receive 100% of the invoice value because no investor returns can be made that way. Also, the discounts applied to the invoice are based on multiple factors so the rates for some will be better than others.
If you want to get the best possible rate, your debtor will need to be made aware that you are using a factoring solution. However, this just requires a little bit of relationship management, and factoring is a very common financial instrument in the business world.
How big is the factoring market?
It’s huge. In Europe alone, the total factoring volume was €1,727,915,000,000, a whopping one trillion, seven hundred and twenty-seven billion, nine hundred and fifteen million euros.
To start, Hiveterminal is working only with companies in Slovenia, which has a tiny part of the European factoring market place at under 0.1% but this still equates to €1,400,000,000 per annum.
Where in Europe is factoring most popular?Find out more on, Factoring in Europe.