One of the best ways to make more money in your business is by selling more of your product or service. There are countless ways to increase sales, depending on your industry, market, business model and goals. When a company sells goods and allows the buyer to pay at a later date, they do so to increase the number of sales they get. Indeed, payment terms have become a vital tool used by businesses to not only drive sales, but manage commercial relationships and give themselves a competitive edge in the market.
Manufacturing and wholesale companies in particular leverage the terms of sales they offer their customers to increase sales performance. But with payment term extension comes the challenge of balancing working capital. Given the vital importance of cash flow in running a business, it is in a company’s best interest to collect on its outstanding accounts receivables as quickly as possible. Companies can expect with relative certainty that they will, in fact, be paid their outstanding receivables. But, because of the time value of money principle, time spent waiting to be paid is money lost.
Finvex.tech´s Trade Receivables Finance solution is aimed at solving this exact problem- growing sales through payment term extension, while maximizing working capital. Our programs, which are supported by market leading technology, injects liquidity into the company to create a win-win situation for themselves and their customers.
Finvex.tech´s Trade Receivables Finance solution is based on a company’s trade accounts receivable – in other words, invoices issued to customers that are fully payable and enforceable, but not yet at their due date. Our financing solution helps companies increase sales and unlock working capital in a balance sheet efficient way. The company boosts sales by offering its customers an extension on payment terms. Paying the company later positively impacts Days Payable Outstanding (DPO) which means more working capital for the buyer. It’s a win-win solution for both the company and its buyers.
In short, the company offers extended payment terms to a portfolio of its buyers and sells the related accounts receivables to a funder on a true-sale basis (and takes them off-balance sheet). The funder pays the company immediately and at the extended invoice maturity, the funder then collects from the buyer. A technology platform, like Finvex.tech, able to handle the complex reporting, monitoring and data processing is typically required to support the ongoing management of the financing program.
In addition to growing sales, the company improves its liquidity and working capital position by reducing its Days Sales Outstanding (DSO). The buyer also benefits- payment terms extension means improved liquidity and working capital too (driven by an increase in Days Payable Outstanding (DPO)). And more liquidity allows the buyer to increase its purchases from the company.
With Finvex.tech the COMPANY can:
With Finvex.tech BUYERS can:
Invoice factoring is an Accounts Receivable based solution, similar to our Trade Receivables Finance, that allows businesses to fund cash flow by selling their invoices to a third-party funder at a discount. The funder advances some funds upfront to the company- typically 70-85%. At invoice maturity, the funder collects from the buyer and makes the remaining balance available to the company, minus their fees.
Like Finvex.tech´s Trade Receivables Finance, factoring can help companies unlock funds tied up in unpaid invoices, improving working capital and cash flow management. Most factoring providers will also manage credit control. However, in contrast to Trade Receivables Finance, the commercial relationship between the company and its buyer remains unchanged. That is, the company does not offer its customers extended payment terms. Factoring solely benefits the company. Finvex.tech´s financing solution is structured to provide advantage to both the company AND its buyers.
| THE COMPANY | THE BUYER | |
| FACTORING | Improve liquidity & working capitalReduce DSOReduce credit risk | No impact |
| SALES FINANCING | Improve liquidity & working capitalReduce DSOReduce credit risk | Improve liquidity & working capitalIncrease DPO |
Finvex.tech´s sale financing solution helps companies boost sales (without impacting leverage) and unlock liquidity in a balance sheet efficient way. With Finvex.tech, companies can develop a strong competitive advantage against others in the market and strengthen relationships with customers. When properly structured and managed through the support of a technology platform, sales financing programs create an ecosystem where everyone in the supply chain wins!
Speak to us today to find out more about setting up your own sales financing program with Finvex.tech.