Many SMEs in the Philippines struggle with cash flow due to delayed customer payments and extended credit terms. Outdated invoicing systems and inconsistent collection processes worsen these delays, disrupting daily operations and limiting growth. Although GDP is projected to grow by 6.0% in 2026, business confidence has declined, highlighting ongoing concerns about cash flow challenges.
Invoice Finance AB offers a practical solution to these issues by helping businesses convert unpaid invoices into immediate working capital. This enables SMEs to improve liquidity, maintain smooth operations, and pursue growth opportunities without waiting weeks or months for customer payments.
In this blog, we will explore what invoice finance is, how Invoice Finance AB operates, its key benefits, and the process behind how it works.
Key Takeaways
- By advancing funds against outstanding invoices, Invoice Finance AB enables businesses to maintain steady liquidity and reduce reliance on slow-paying customers.
- It offers rapid access to cash, flexible scaling with sales, and optional outsourcing of collections to ease internal workload.
- Ideal for businesses facing challenges such as long payment terms, seasonal fluctuations, rapid growth, or limited access to bank loans.
- Essential factors to consider are costs, contract terms, effects on customer relations, and eligibility criteria.
- Success depends on accurate invoicing, choosing the right financing model, understanding actual costs, syncing with cash flow cycles, monitoring customer credit, and clear communication.
What is Invoice Finance?
Invoice finance is a financial solution that allows businesses to access cash tied up in unpaid invoices before their due dates. Instead of waiting weeks or months for customers to pay, companies can sell or borrow against these outstanding invoices to improve their cash flow immediately. This helps businesses cover operating expenses, invest in growth, and maintain financial stability without taking on traditional debt.
There are three common types of invoice finance:
- Invoice Factoring: A business sells its unpaid invoices to a finance company (the factor). The factor then takes over the responsibility of collecting payments from customers. The business receives most of the invoice value upfront, minus a fee, while the factor handles collections and credit control.
- Invoice Discounting: Here, businesses borrow money against their unpaid invoices but retain control over their sales ledger and customer collections. The finance company advances a percentage of the invoice value, and once customers pay, the business repays the advance plus fees.
- Selective Invoice Financing: This flexible option lets businesses choose specific invoices to finance rather than their entire sales ledger. It’s ideal for companies that want to manage cash flow for particular clients or projects without committing to all invoices.
Businesses that face long payment cycles or unpredictable payment schedules can benefit significantly from invoice finance, improving cash flow stability and enabling smoother day-to-day operations.
With a clear understanding of invoice finance fundamentals, we can now examine how Invoice Finance AB supports businesses in overcoming working capital issues efficiently.
How Invoice Finance AB Works?
Invoice Finance AB is a Swedish company specializing in providing financial solutions such as invoice factoring and debt collection services for businesses. One of their key services, invoice factoring, enables companies to access cash tied to their outstanding invoices. This helps ease cash flow constraints by giving access to funds before customer payments are received.
Here’s the step-by-step process of how Invoice Finance AB operates:
- Invoice Submission: The business uploads or submits copies of unpaid invoices through Invoice Finance AB’s digital platform.
- Verification: Invoice Finance AB reviews the invoices and verifies the customers’ creditworthiness.
- Advance Payment: Once approved, Invoice Finance AB immediately releases a portion of the invoice value, usually ranging from 70% to 90% providing quick liquidity to the business.
- Invoice Collection: Invoice Finance AB takes responsibility for collecting the full payment directly from the customer by the invoice due date.
- Final Settlement: When the customer settles the invoice, Invoice Finance AB deducts its fees and the initial advance, then transfers the remaining balance to the business.
Example: A Philippine wholesale business has ₱5,000,000 in outstanding invoices with 60-day payment terms. To improve cash flow, the company submits these invoices to an invoice financing provider. The provider advances 80% of the invoice value, releasing ₱4,000,000 immediately. After 60 days, the provider collects the full amount from the customers, deducts a 3% fee, and transfers the remaining balance to the business.
Now that we’ve covered how the process works, let's explore the key benefits businesses gain by partnering with Invoice Finance AB.
Benefits of Using Invoice Finance AB
Partnering with Invoice Finance AB provides SMEs with targeted solutions that improve cash flow, enabling them to focus on operations instead of chasing overdue invoices. With flexible financing options and professional debt collection support, they adapt to the needs of various industries.
Below are the key advantages and how they can impact real businesses:
1. Faster Access to Working Capital
Immediate access to funds locked in unpaid invoices enables the timely payment of expenses, payroll, and supplier obligations.
Example: A manufacturing firm can release funds from a 60-day customer invoice to buy raw materials immediately and avoid production delays.
2. No Impact on Existing Credit Lines
Since invoice financing is based on receivables rather than traditional loans, it doesn’t tie up collateral or reduce the availability of bank credit facilities.
Example: A retail business can use invoice financing without touching its bank overdraft, keeping it available for emergencies.
3. Scales with Sales Volume
The more invoices a business generates, the more funding becomes available, eliminating fixed credit limits that restrict growth.
Example: An e-commerce company can secure higher financing during festive sales when invoice volumes spike.
4. Outsourced Collections in Factoring
In factoring arrangements, Invoice Finance AB directly follows up with customers, reducing the burden on in-house finance teams and improving collection efficiency.
Example: A logistics firm can let Invoice Finance AB handle slow-paying corporate clients, freeing staff to focus on operations.
5. Predictable Cash Flow for Planning
Consistent access to funds allows accurate forecasting, timely supplier negotiations, and avoidance of costly short-term borrowing.
Example: A construction company can plan bulk material purchases months in advance, securing discounts from suppliers.
These benefits show why SMEs adopt Invoice Finance AB to maintain operational stability and keep growth plans on track, even when customers delay payment.
Next, we’ll look at the situations where invoice finance is most effective and the types of businesses that can benefit most from Invoice Finance AB’s services.
Who Should Consider Invoice Finance AB?
Invoice Finance AB is well-suited for businesses that issue invoices on credit terms and face delays in customer payments. Such delays can disrupt cash flow, making it difficult to cover operating expenses, pay suppliers, or fund growth initiatives.
Below are the situations where the service is most valuable:
- Industries with Long Payment Cycles: Manufacturing, wholesale, logistics, IT services, and staffing agencies often work with 30–90 day payment terms. Invoice Finance AB ensures these businesses have steady cash flow while awaiting payment.
- Seasonal Businesses: Companies in tourism, retail, or agriculture face uneven sales patterns. This financing helps maintain operations and cover expenses during off-peak seasons.
- Rapid Growth Scenarios: Businesses scaling quickly may secure large orders or new contracts that require upfront costs. Invoice Finance AB provides the liquidity needed to fulfill these commitments without operational slowdowns.
- Limited Access to Bank Loans: Firms with insufficient collateral or those avoiding lengthy loan approvals can use invoice financing as a faster, asset-backed alternative.
- Stable Customer Base: Companies with reliable, creditworthy clients can confidently use invoice financing, as repayment depends on customer payment performance.
By targeting these scenarios, Invoice Finance AB helps businesses maintain stable cash flow and sustain growth even when customer payments are delayed.
Next, let’s look into important factors to consider before choosing invoice finance to ensure that it fits your business strategy.
Key Considerations Before Opting for Invoice Finance AB
Before choosing Invoice Finance AB, businesses should evaluate how its services align with their financial structure and growth plans. Factors such as cost, contract terms, and impact on customer relationships can influence the decision. Understanding these aspects ensures the financing arrangement supports long-term stability.
Here are the essential factors to review before engaging their services:
- Costs and Fees: Identify the exact discount rate (e.g., 1–5% of invoice value per month), service charges, and any administrative or early termination fees. Compare with alternative financing options to determine cost-effectiveness.
- Contract Terms: Check if the agreement is fixed-term or rolling, whether it allows selective invoice financing, and the notice period for ending the service.
- Customer Relationships: In factoring, Invoice Finance AB contacts your customers directly for payment; in discounting, you manage collections. Choose the model that best aligns with your client relationship strategy.
- Accounting Integration: Ensure your finance team can record advances, outstanding balances, and fee deductions accurately, and adjust cash flow forecasts accordingly.
Addressing these details upfront reduces unexpected costs, prevents contractual constraints, and ensures seamless integration of invoice financing into daily operations.
Let’s now explore the best practices for using Invoice Finance AB effectively to enhance cash flow reliability and support sustainable business growth.
Best Practices for Using Invoice Finance AB Effectively
Implementing Invoice Finance AB without a well-defined strategy can result in unnecessary costs, hidden fees, or workflow disruptions. By applying proven best practices, businesses can align financing with cash flow demands, enhance scalability, and strengthen client relationships while avoiding over-reliance on borrowed funds.
Here’s how it supports a balance between financial flexibility, credit control, and operational discipline:
1. Maintain Accurate and Up-to-Date Invoicing
Keeping your invoicing process error-free is critical for faster funding approvals and better terms.
- Timely Issuance: Send invoices immediately after delivering goods or services to reduce payment delays.
- Clear Formatting: Ensure invoices include correct buyer details, due dates, and payment instructions.
- Regular Reconciliation: Match payments received with issued invoices to detect discrepancies early.
2. Choose the Right Financing Model
Invoice Finance AB offers multiple models such as factoring, invoice discounting, and selective financing.
- Factoring: Ideal for businesses requiring both financing and credit control support from the financier.
- Discounting: Ideal for companies wanting to retain customer relationships while accessing funds.
- Selective Finance: Useful for funding specific high-value invoices rather than the full ledger.
3. Evaluate the True Cost of Financing
Beyond headline rates, hidden fees can impact profitability.
- Service Fees: Charged for managing collections or providing credit insurance.
- Discount Rates: The percentage deducted for early payment; compare across providers.
- Penalty Clauses: Check for charges on late settlements or minimum usage requirements.
4. Align Financing With Cash Flow Cycles
Use invoice financing to smooth predictable gaps between payables and receivables.
- Seasonal Businesses: Plan funding for high-inventory months.
- Long Credit Terms: Bridge the gap for clients with 60-90-day payment schedules.
- Growth Phases: Support expansion without taking on excessive debt through traditional loans.
5. Monitor Customer Creditworthiness
Your receivables’ value depends on your customers’ ability to pay.
- Credit Checks: Assess new clients’ payment history before extending terms.
- Ongoing Monitoring: Re-evaluate key accounts quarterly to manage risk exposure.
- Diversification: Avoid depending too heavily on a single client for a large portion of receivables.
6. Build Transparent Communication With the Financier
Strong collaboration helps secure better terms and faster approvals.
- Regular Reporting: Share timely updates on sales trends and debtor performance to maintain lender confidence.
- Negotiation Advantage: Use a proven record of timely collections to renegotiate rates or terms.
- Dispute Resolution: Resolve invoice disputes promptly to ensure uninterrupted funding flow.
By following these best practices, companies can optimize cash flow management and sustain healthy operations with the help of Invoice Finance AB.
n90: Your Solution for Efficient Invoice Financing
Delayed customer payments, seasonal sales dips, and tight working capital cycles can disrupt even the most well-managed businesses. Without consistent cash flow, covering payroll, paying suppliers, or investing in growth becomes difficult, leading to stalled operations and missed opportunities. Traditional bank loans are often slow to process and require strict collateral, which may not suit fast-moving businesses.
We at n90 offer a flexible Invoice Financing solution designed to convert the value of your unpaid invoices quickly. By turning outstanding receivables into immediate working capital, n90 helps your business maintain smooth operations, meet urgent expenses, and seize growth opportunities without waiting for customers to pay.
Here’s what we offer to address the critical financial needs:
- Invoice Financing: Enables businesses to access 70–90% of their outstanding invoice value quickly, helping them manage cash flow and meet payment obligations on invoices with 30, 60, or 90-day terms.
- Bridge Loans: Specifically designed to close short-term cash flow gaps, allowing you to seize immediate opportunities or manage transitions, much like the closed bridging loans discussed earlier.
- Small Business Loans: Flexible financing options for broader business needs, including expansion, inventory, or operational cash flow.
Eligibility Requirements for Invoice Financing in the Philippines
- You are a resident of the Philippines with a valid government-issued ID or Alien Registration Card (ARC).
- Your business is registered with the Bureau of Internal Revenue (BIR) and either:
- Department of Trade and Industry (DTI) for sole proprietorships, or
- Securities and Exchange Commission (SEC) for partnerships or corporations.
- Your company’s annual revenue is at least ₱25 million.
Invoice Financing is ideal for companies that issue invoices with credit terms like net-30 or net-60 and experience cash flow gaps due to slow-paying customers. We pride ourselves on a relationship-based approach, offering clarity, speed, and financing designed for real business challenges.
Final Words!
Invoice finance is a practical and flexible solution for businesses aiming to improve cash flow without adding debt burdens. Invoice Finance AB offers customized, transparent, and scalable financing options suitable for diverse industries. For companies seeking to strengthen liquidity and maintain financial stability in today’s dynamic market, Invoice Finance AB presents a reliable and effective option.
Similarly, businesses in the Philippines can rely on n90’s customized invoice financing solutions to tackle local cash flow challenges. By offering fast funding against unpaid invoices, n90 enables companies to manage expenses and invest in growth without waiting for customer payments.
Get in touch with n90 for a transparent and professional approach to converting unpaid invoices into immediate working capital.
FAQs
1. Can Invoice Finance AB help businesses expand into new markets with minimal upfront cost?
Yes. By turning unpaid invoices into working capital quickly, Invoice Finance AB enables businesses to fund market expansion, enter new territories, or scale operations without relying on traditional credit lines or dipping into cash reserves.
2. How does Invoice Finance AB handle funding for invoices from international clients?
Invoice Finance AB supports cross-border invoicing by assessing the creditworthiness of overseas customers and providing advances in local or preferred currencies. This helps businesses maintain stable cash flow even when working with global clients.
3. Will using Invoice Finance AB affect how customers view my business?
Invoice Finance AB operates with transparency and professionalism, so using the service reflects efficient cash flow management rather than financial trouble. It can position your business as proactive and well-organized.
4. How fast can a business set up invoice financing with Invoice Finance AB?
With its streamlined digital processes, most businesses can complete the setup within just a few working days. This allows faster access to funds compared to traditional bank financing.
5. Can financing terms be adjusted based on invoice age or customer reliability?
Yes. Invoice Finance AB offers flexible arrangements that take into account factors like the age of invoices, the payment history of customers, and the overall invoice volume, resulting in more competitive terms for strong receivables.
