What is invoice lending?

Alexander Roos

Qred Bank AB
7/2/2020

When talking about invoice lending, you often refer to the banks' solution where you get 70% of the capital directly when you transfer the invoice and the remaining 30% when the invoice is paid.

In addition, invoice lending is often used when the customer's recipient is not creditworthy for the amount as you can still have the opportunity to borrow the invoice and actually face the same risk as you invoiced yourself - the big difference is that you get some of the money out directly.

We saw a problem in this as customers need to post payments on two occasions instead of one which means more work, not less.

Therefore, we decided that whether it is invoice purchase or invoice loan, we will always pay out the full amount minus our fee directly. No matter what the invoice recipient looks like.

Invoice lending means that the company signs its invoices with a factoring company. This means that the parties agree to borrow the invoices (the loan-to-value ratio is usually about 70% of the invoice amount). The company that transfers the invoices must then notify its customers that the invoices have been transferred. When customers then pay the invoices, the payment goes to the factoring company, which then handles reminders, accounts receivable and possibly debt collection.

Get started with a factoring solution today!

Me and my colleagues are here for you on 020-150 111 or on factoring@qred.com.

/Alexander Roos

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