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In business, you are familiar with the term cash flow (cash flow). This cash flow flows from customers. to your company It then goes to suppliers that provide raw materials and labor for the company’s operations. What if the cash flow from customers is stuck? Yes, meaning there is no money you can spend on employee salaries or purchase raw materials.
Invoicing financing through P2P lending is one solution you can use when faced with problems like this.
What is invoice financing?
Invoice financing is a method of securing a third party loan by placing an invoice or a consumer bill as collateral. debtor finance.
Third party means a person or company other than your supplier or employee. This third party can be a banking company. or the latest including the company P2P Loans.
Generally, companies that sell products to consumers in large quantities need invoiced financing, such as wholesalers, state enterprises, etc., to allow consumers to spend time to pay a certain amount.
broadly said The benefit of this loan method is that the company does not have to worry about how to pay employees and purchase raw materials. If there is a payment problem from the customer for money lenders This can bring additional income. This is because the borrowing company not only has to pay the principal of the loan. but also the interest
In addition to the wasteful purpose, most people Peer-to-peer lending platform Provide credit services for invoicing financing.
How does invoicing financing work?
Before understanding how invoicing financing works in P2P lending, you should understand a few things: P2P Lending Terms the following:
- Payment Terms (TOP): The repayment period that the Company assigns to the customer.
- Payer: A term used by P2P Lending companies to clients of borrowing companies. This is because the customer has to pay the company borrowed money to the P2P lending party.
There are several steps that a company must take. If you want to request an invoiced loan with P2P Lending:
- The company has provided services or delivered products to customers. (payer) and has sent invoices for services and purchases to customers.
- A copy of the invoice will be sent to the loan provider.
- The lender will give the company a special code in the form of a virtual account. And will check the invoice documents sent by the company to determine the maximum loan amount and risk level.
- If the documents are reviewed and approved, P2P Lending will offer the lender an invoiced financial product. (those who invest through the relevant P2P Lending platform) together with the fund information sheet There are also P2P lenders that will provide loans directly without distribution to investors.
- A loan can be withdrawn if the minimum is 70% or 100% of the maximum capital.
- on the due date The payer must pay the P2P lending party through the virtual account or code previously provided.
- Funds entering the platform are distributed to each lender that has made loans in the P2P lending market.
You need to know that the amount borrowed by P2P Lending is not the same as the invoice amount. For example, if your customer’s billing amount is Rp. 30,000,000, P2P will lend you only Rp. 25,000,000.
In addition, payers must pay on debtors faster than the Payment Terms (TOP) set by your company. The reason is simple, of course, P2P parties prefer to get their money back in a faster time frame because they are less risky.
Advantages of invoicing financing for borrowers
1. Get a loan for short term expenses.
The company needs money to cover short-term operating expenses. These short-term expenses such as salaries, purchases of raw materials machine repair cost The cost of purchasing equipment, etc. In fact, not all consumers, especially those who buy in bulk directly, can easily pay their dependents.
The existence of this invoicing financing plan allows companies to can finance their short-term expenses So that their business operations are maintained without having to wait for customers to pay their bills.
Two of the most famous P2P credit providers for invoicing financing are: investor and acceleration.
2. Use “empty” assets for additional cash flow.
in accounting Invoices can be included in the category of current assets in the form of accounts receivable. This property is of no use until the consumer pays or fails to pay for evidence in court.
with invoice financing These invoices to the consumer can be used to obtain funding. You do not need fixed assets as collateral. An alias invoice is enough.
3. It is a form of risk reduction.
as mentioned above in general Invoiced financing applies to a wide range of consumer service companies. Even some P2P companies require borrowers in this way to be affiliated with large companies such as BUMN or BUMN. Other Lu Chips
One of the risks in servicing customers with such large orders is the risk of late payments or even defaults. Of course, you still remember that even large corporations find that surviving during this period of time is the risk of failure. How difficult is the pandemic? One way to reduce the risk of default and late payments from these consumers is to apply for invoiced loans.
With this mechanism, your consumers will pay directly to the relevant P2P companies. As you get a loan that can be used for any purpose. Safe cash flow, convenient business
Advantages of Invoicing Finance for Lenders
1. Earn passive income
The first advantage of lending to companies through P2P Lending is passive income. in fact It can be said that passive income opportunities through P2P Lending are more likely than those from banks or other investment tools.
2. Helping the Company’s Operations
In addition to the financial benefits The benefit of financing companies through this mechanism is also in the form of funders that can assist the operations of companies that are experiencing problems due to consumer defaults.
To help lenders reduce their risk, P2P platforms require certain criteria to become a borrower, such as a minimum amount of assets. office address (to enable offline billing) with payer type
3. Portfolio diversification
Investing through P2P Lending can also be used as a tool to diversify the funder’s portfolio. Therefore, lenders can not only invest in the capital and money markets. but also P2P lending.
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