Sell your invoice to get cash flow


Slow pace of payments on invoices is one of the main constraints to the growth of small businesses. Unfortunately, small businesses have no choice but to reluctantly comply with the 30-45 day invoice settlement terms that their clients dictate.

But what small business owners might not be aware is that they could be turn their invoices into instant liquidity through invoice discounting, according to a Cape Town based invoice discounting expert.
“The invoice discounting market in South Africa is grossly under served, with the significant amount of SME and start-up businesses in the country there is still a huge gap for non-traditional and trusted ways for businesses to improve their cash flow and achieve growth,” says David Banfield, vice president of the Interface Financial Group.
In the main, explains Banfield invoice discounting involves the following steps:
1. A company buys an invoice or sets of invoices from an SME at a discount, providing them with immediate cash flow until the invoice is settled by their client.
2. In a typical transaction, a manufacturer or service provider delivers their goods or they deliver their service [and] they issue their invoice and then they wait: 30, 40, 50 days in order to get paid. Hence a financier takes the waiting period out of the equation.
3. Once the invoice has been created and everything has been checked out, a financier buys that invoice. In essence, owns the invoice.
4. The financier takes the invoice through to maturity, get paid by their customer and that’s the end of the transaction.

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