Key takeaways
- Start with the reason you need funds and when cash is expected to arrive.
- Check settlement dates, instalments and every fee before comparing offers.
- Invoice eligibility and lender approval are assessed separately.
Two ways to fund a business
Sales invoice financing releases part of the value of an eligible unpaid invoice before the customer pays. A business term loan provides an approved amount for a broader business purpose, with repayments over an agreed period.
The distinction matters when planning cash flow. A receivable already exists when an invoice is financed; a new investment may take longer to generate revenue.
Compare the structure
| What to compare | Invoice financing | Business term loan |
|---|---|---|
| Funding basis | Eligible unpaid invoices | Approved borrowing amount |
| Typical use | Bridge a receivables gap | Working capital or investment |
| Repayment | Contract-linked settlement | Scheduled instalments |
| Key question | Does the invoice qualify? | Can the business sustain repayments? |
Put the timing on paper
Illustrative example: a supplier is owed S$40,000 in 45 days but needs S$25,000 for stock now. An advance against an approved invoice could address that timing gap. The advance percentage and charges must come from an actual offer.
A separate equipment purchase may instead require funding that can be repaid over a longer period. Write down the purchase date, expected revenue dates and proposed repayment dates before selecting a facility.
Ask for the complete cost
Request all financing charges, fees, repayment dates and security requirements in writing. Check what happens if a customer pays late and whether the business remains responsible for settling a financed invoice.
Compare offers for the same amount and period. A quoted percentage alone does not show the dollar cost or the pressure repayments could place on the business.
Questions to take to a provider
- Which invoices or business purposes qualify?
- How much cash will actually be available after charges?
- When must each payment be made?
- Who carries the risk if a customer does not pay?
- Are guarantees or other security required?
Common questions
Does every invoice qualify?
No. The provider assesses the invoice, buyer and business before deciding what it can finance.
Is one option always cheaper?
No. Compare the full quoted cost and the repayment pattern for your circumstances.
Further reading
General information only. Product availability, eligibility and terms vary by provider. These guides do not promise approval or a particular offer.
