When you want to improve the working capital in your company you need to know the following:
- Stock and inventory: large amounts of inventory will tie up capital which then won’t be directly available for alternative use. A reduction of the stock and inventory may then improve the working capital in the company.
- Receivables: open receivables also implies tied up capital that cannot be placed freely until each receivable has been regulated. To increase cash flow, for example by charging the customer at delivery rather than 30-90 days later, is one way to improve working capital.
- Debts: debts and outstanding payments to suppliers, partners and other creditors also play a part. Prolonged own payments and a general lowering of current obligations also contribute to increasing the working capital.
All the items above aren’t as easy to improve when the need appears. Lowering the stock or assets in general are usually easier said than done. For example, it is normally much easier to optimize the company’s own cash flow than reduce stock, inventory and own debts. Then factoring and automation of claims management. Properly used, most companies will benefit from the flexibility, time savings and predictable liquidity that you can achieve through factoring. No matter whether the company is newly started or well established.
Factoring - for secured cash flow and liquidity
As a company you want to be competitive and offer your clients maximum convenience when it comes to payment options. That usually ends in long payment terms between 30 and 90 days being standard terms, rather than advance payments. But these long payment terms can actually create problems and affect your own working capital negatively, especially when the invoice amounts are large.
But there is a solution - pre-financing outstanding invoices with the help of factoring.
Invoice purchasing through factoring means that you sell your outstanding receivables to a factoring partner. The invoiced amount (minus a fee) is then paid out to you immediately. This creates instant liquidity and a possibility to plan your own cash flow in a more efficient way.
Optimizing cash flow with automated processes for claims and reminders
Beyond long payment terms, another complication is that almost half of all invoices are paid too late. This leads not only to liquidity bottlenecks, it can also indirectly cause costs through time consuming administration and reminder handling.
To use an automated solution for invoice handling saves time and ensures that overdue invoices are reliably traced. As a business owner, and especially within a recently started company, it can be uncomfortable to execute reminder processes consistently, as one might be afraid to scare customers off. A professional and automated service can be of great help here.
Improve working capital with Invoier
Invoier offers solutions for factoring (e.g. invoice purchasing) so that you can focus on your company’s growth, without having to spend time on invoice administration.
Benefits of Invoier’s marketplace
- A transparent offer of what you could sell your invoice for - without any conditions, hidden fees, or special contract terms
- You choose if you want to sell a single or several invoices - a flexibility that traditional factoring partners are not offering
- Invoier’s services open up possibilities for financing also for small- and medium sized companies, who usually won’t be offered factoring solutions or low interest loans
Want to learn more about factoring and how to improve working capital? Or see just how much you would get for your invoice? Register your company at Invoier today. Creating an account takes only 2 minutes and is free of charge! Register your company with Invoier todayTo create an account will only take 2 minutes and is free and without conditions
About Invoier
Invoier provides solutions for company financing and has developed Sweden’s only marketplace for invoices. The purpose is to enable market-based pricing for financing and growth of small- and medium sized businesses, as well as a new type of investors get access to this market. The technical base of the offer consists of a unique AI engine that will anticipate both if and when an invoice will be paid. Invoier was founded in 2020 in Stockholm and is financed by the EU and KTH and operates with permission of the Swedish Financial Supervisory Authority and the Swedish Authority for Privacy Protection. Read more about Invoier Read more about Invoier
