- InvoiceInterchange offers an online invoice trading platform, where SMEs can manage their working capital needs and get cash advances by auctioning their invoices to a network of investors
SMEs struggle with cash flow issues when servicing customers as a result of cash locked up in invoices due in 30 – 90 days since the sales. The issue is intensified for fast-growing SMEs servicing large customers such as MNCs. Bank loans do not fully target the issue, as they involve a long process to obtain.
InvoiceInterchange targets this need by being:
- Flexible: SMEs can selectively auction their invoices to control their funding costs, whilst traditional factoring requires the selling of whole invoices.
- Fast: Once the auction for the invoice closes, funds will be advanced to the seller within 24 hours.
- Confidential: The customers of the SMEs will not be informed of the auctioning of the invoice.
For investors, InvoiceInterchange offers access to an alternative finance asset class, which consists of short-term (30 to 90 days) and secured investments with double-digit average annual returns. In terms of the counterparties involved, investors fund invoices of Singaporean SMEs (with minimum annual turnover of SG$250K) and the trade debtors are creditworthy large entities (MNCs, public listed companies and government entities).
In order to minimise the risks for investors, InvoiceInterchange conducts a background check on SMEs, which consists of checks on financial performance, credit, AML, fraud and litigation. And, in case of a default by the debtor, the seller is still legally liable to compensate the investor(s).
Investors that use the company’s platform to invest in invoices consist of family offices, asset managers, finance professionals, asset based lenders and high-net-worth individuals.
How it works
- InvoiceInterchange charges SMEs a transaction fee for use of the platform. As mentioned above, this fee is about 1.5% to 2.5% of invoice amount.
- As of February 2016, investors have funded more than SG$ 745,000 worth of invoices through InvoiceInterchange’s platform