What is Invoice Trading?
Crowdfactoring, invoice trading or invoice crowdlending is the new alternative to traditional bank products related to standard factoring, invoice discounting, and receivables financing. It is one type of peer-to-peer (P2P) lending, which allows businesses and individuals to purchase invoices or receivable notes at a discount and to selectively sell single unpaid invoices (accounts receivable) to a pool of private investors, using an online invoice trading platform.
It is cheaper than any traditional system, due to lower charges and fees, as well as reduced transaction costs. Accounts receivable can be purchased from any location by investors dispersed all over the country or region. In order to help its suppliers finance its receivables more easily - and at a lower interest rate than what would normally be offered, the ordering party can now easily arrange supply chain financing as a cloud-based SaaS service.
Invoice trading (Crowdfactoring) is a flexible and promising financial liquidity management method, which is especially useful for small and medium-sized enterprises (SMEs). It has many advantages for businesses and investors, and it may act as a source of finance for SMEs. Businesses can access finance quickly, improve their working capital and free up cash that can be further used to improve their short-term liquidity, pay expenses, or make new investments.
Investors who seek short-term investments are able to earn good returns on their money, which are well above the average. Therefore, trading receivables is often the most suitable option for both borrowers (SMEs) and investors. Unlike some other types of peer-to-peer lending, such as P2P business lending or P2P consumer lending, where the investment is often unsecured, invoice trading has the advantage of having the invoice as a guarantee which drastically minimizes the risks.
Why Invest In Invoices?
Investing in accounts receivable leads to better control over cash and working capital for both borrowers (SMEs) and investors which is the reason why investments in this area are currently gaining great significance. Not to mention that a shift to long-duration issuance in the corporate bond market has limited the supply of high-quality, short-term investment products. As a result, short-term money investors have increasingly started to consider confirmed receivable purchases as a form of trade finance that offers high-quality, non-financial corporate credit risk in a short-term, floating-rate product.
When it comes to investing in invoices, investors obtain new short-term investment instruments, with low risk and good returns. It is also another way for investors to diversify risk across their investment portfolio.
The benefits of using our Invoice Trading platform:
- Improved cash flow
- Fast working capital injection
- Business growth
- Supply chain financing
- Increased flexibility and scalability
- No collateral asset
- Smooth online registration & identification
- Cloud-based, software as a service (SaaS) platform
Are you looking for a partner that can provide this kind of digital Trading platform for your target market? Please get in touch with ZWEBB Fintech by filling out the form below.