Invoice factoring, also known as receivables finance or accounts receivable financing, is a financial tool that allows companies to convert their unpaid invoices into cash. This can be an effective way for companies to manage cash flow and improve their working capital, especially when they have outstanding invoices that won't be paid for several weeks or months.
The basic dynamic of invoice factoring involves a third-party finance company (known as a factor) purchasing the outstanding invoices from a company at a discount. The factor then takes over the responsibility for collecting the payments from the customers who owe the money. Once the customers pay the invoices, the factor returns the balance of the money to the company, minus their fees.
The benefits of invoice factoring for companies include:
- Improved cash flow: By converting outstanding invoices into cash, companies can use the money to pay their bills, invest in new projects, or cover unexpected expenses.
- Reduced risk: When a company sells its invoices to a factor, it transfers the risk of non-payment to the factor. This means that the company no longer has to worry about customers who fail to pay their bills.
- Faster payments: Factors can often collect payments faster than a company could on its own, which can speed up the cash flow cycle and reduce the need for borrowing.
In summary, invoice factoring can be a useful tool for companies looking to improve their cash flow and manage their working capital.
Qube Financing developed a very advanced application of invoice factoring and with Qube added value:
- Qube Financing (and its affiliates) have developed the Qube platform, supported by its proprietary PRI® inside infrastructure, front-end to back-end fully automated receivables financing platform (“Qube Platform”), as one of the earlier Fintech 3.0 initiatives in the market and is fully equipped to be the winning platform of the third wave.
- This Qube Platform is fully operational and has been fully adopted by institutional investors, including the standardized procedures, ‘modus operandi’ and underwriting process steps & criteria.
- Qube targets European SME and Mid Market Corporates with a fully standardized approach as well as tailored solutions for multinationals, predefined underwriting criteria that are agreed with institutional investors and supported by PRI® inside and the add-on credit & collection management application PRI® CrediSoft and PRI® Supply Chain.
- Offering consolidated multi jurisdictions multi operating companies fully automated working capital financing solutions based on invoiced turnover, whereby PRI® inside directly interfaces with the Corporate's ERP systems, the Connection.
- The Qube Platform benefits from a modular design and standardized processes and legal infrastructure.
- US version of PRI® infrastructure can be calibrated for US time zone and jurisdiction.