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IFS Capital
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If you’ve been exploring ways to improve your business’s cash flow, you’ve likely come across terms like Invoice Financing, Invoice Factoring, and Accounts Receivable Purchase (ARP). These terms are often used interchangeably, which can create confusion. However, there are key differences between them, and understanding these can help you choose the right financial solution for your business.
Invoice Financing allows businesses to borrow money using their unpaid invoices as collateral. The business remains in control of collecting payments from its customers. Once the customer pays the invoice, the business repays the loan, including any associated fees. In this type of financing, unpaid invoices serve as security for the loan, but the business retains full responsibility for collections.
Key point: The business uses invoices as collateral but keeps control over the collection process.
Invoice Factoring involves selling unpaid invoices to a third-party financier, such as a factoring company, to receive an advance on the value of those invoices—typically 80-90% of the invoice's value. The factoring company takes over responsibility for collecting payments from the customers. This process is called Notified Factoring because the customer is informed that the invoice has been sold and is instructed to pay the factoring company directly.
Key point: The factoring company takes over the collections process, and the customer is aware that the invoice has been sold.
Accounts Receivable Purchase (ARP) is a financial solution similar to invoice factoring. In this process, a business sells its unpaid invoices to a financial institution in exchange for immediate cash. In Notified ARP, the customer is informed that the invoice has been sold to the financial institution, which then takes over the responsibility for collecting payment.
This solution is particularly beneficial for businesses that need quick access to cash flow without managing collections themselves. Typically, businesses can receive up to 90% of the invoice value upfront, with the remaining balance settled once the customer pays the invoice.
Key point: ARP provides an efficient way for businesses to unlock cash tied up in unpaid invoices, while outsourcing the collections process to a third party.
If you're like many SMEs, waiting 30, 60, or even 90 days for customer payments can create operational challenges. At IFS Capital, we understand the difficulties that long payment terms pose to businesses. That’s why we offer Accounts Receivable Purchase (ARP) as a reliable, flexible solution designed to help businesses access immediate working capital without the burden of chasing customer payments.
IFS Capital specializes in Notified ARP, where businesses can sell their unpaid invoices and receive up to 90% of the invoice value upfront. This solution not only provides quick access to cash but also relieves businesses from the administrative task of managing collections, enabling them to focus on core operations and growth opportunities.
The process for using IFS Capital’s ARP service is simple, efficient, and designed to support your business’s cash flow needs. Here’s how it works:
By choosing IFS Capital’s ARP solution, your business can unlock a range of benefits that go beyond just improving cash flow. Here are some key advantages:
With ARP, you don’t have to wait for customers to settle their invoices. By selling your receivables, you get immediate access to up to 90% of the invoice value upfront, allowing you to cover operational expenses, pay suppliers, or invest in business growth.
Chasing payments can be time-consuming and stressful, especially for businesses with long payment cycles. IFS Capital takes care of the entire collections process, so you can focus on running your business while we handle the logistics of customer payments.
Unlike traditional loans or lines of credit, ARP does not add any debt to your balance sheet. You’re selling invoices rather than borrowing against them, ensuring your financial profile stays healthy while you access the funds you need.
Cash flow instability can create serious challenges for businesses, especially when customer payments are delayed. By using ARP, you can ensure a steady cash flow that helps you meet payroll, manage day-to-day operations, and take advantage of new opportunities.
At IFS Capital, we understand that every business has unique needs. Our ARP solutions are flexible, allowing you to choose which invoices to sell and when to sell them. This ensures that your financing solution aligns with your specific cash flow requirements.
IFS Capital’s ARP service is ideal for businesses across a variety of industries that face long payment cycles and need quick access to cash flow. Industries that frequently benefit from ARP include:
Manufacturers often operate on extended payment terms, waiting 60-90 days to receive payment for goods produced. ARP helps these businesses unlock cash quickly, ensuring they can maintain production schedules, purchase raw materials, and meet operational costs.
In the logistics industry, waiting for payment after delivering services can delay business growth. By selling invoices through ARP, logistics companies can secure the cash they need to keep trucks on the road and manage their day-to-day operations.
Wholesalers and distributors often provide goods to retailers with long payment terms. ARP allows them to access cash upfront to maintain inventory levels, invest in new products, and manage operating expenses.
For professional services firms, such as legal, accounting, or consulting services, extended payment terms can create gaps in cash flow. ARP offers a way to unlock capital tied up in receivables, enabling these firms to continue serving clients while keeping operations running smoothly.
If your business is facing cash flow challenges due to long payment terms, IFS Capital’s Receivable Financing solutions can provide the immediate financial relief you need. With fast access to cash and expert management of collections, you can focus on growing your business while we handle the rest.
Contact IFS Capital today to learn more about how our ARP solution can help improve your cash flow and streamline your business operations.
IFS Capital Limited, established in 1987, is a trusted Singapore-based financial institution. Specializing in tailored financial solutions for Micro, Small & Medium Enterprises (MSMEs), IFS Capital offers factoring, invoice financing, and various loans to support business growth. Rely on our expertise for your financial needs.
