How To Use Invoice Sales To Generate Instant Cash Flow: Everything You Need To Know!
Have you ever thought about selling your invoices? Maybe you didn't even know this was possible. Selling your invoices means that you are no longer dependent on the payment term of your client, but receive your money directly from the party that buys your invoice.
Factoring, or selling outstanding invoices, is a way for businesses to quickly access working capital. By selling outstanding invoices, a company can quickly generate cash flow and reduce financial pressure. It is a popular financing method among small and medium-sized businesses. But what is factoring and how does it work exactly?
Do you also suffer from long outstanding invoices?
In the Netherlands, payment terms of 30 to 60 days are most common. Larger companies often have even longer payment terms. As a result, you as an entrepreneur have to wait until you have access to the money from your outstanding invoice or invoices. This can be annoying if you need the money for an investment, personnel costs or supplier payments, for example. Fortunately, Boozt24 has a solution for that!
Selling invoices offers the solution for entrepreneurs
Factoring was originally a form of financing mainly used by large companies. Since a few years, however, factoring as a form of financing has also been available for SMEs. Factoring offers flexible financing solutions for SMEs, making it an ideal form of financing for both the short and long term.
Sell outstanding invoices
Why sell invoices?
1. Debtor risk is covered: With factoring you transfer the payment risk on an invoice. According to the law parties such as the Tax and Customs Administration have the first right to payment. As a creditor you often end up at the bottom of the list, so you will probably not be paid (in full). This means that you must write off this invoice. Factoring provides insurance against bankruptcy and default, providing peace of mind and security.
2. No Repayment Obligation:Invoice sale is not a loan and therefore does not require any repayment from you.
3. Automatic credit check: When considering a new customer, it is wise to do research beforehand. This research provides a degree of certainty about the customer's ability to ultimately pay your invoice. When using factoring, the factoring company performs a credit check on your customer. If the customer appears to be creditworthy, you can use factoring. This provides peace of mind when doing business with this customer. If the factoring company can't help you, it's a signal to be more careful with this customer.
What does it cost to sell my outstanding invoices?
The costs we charge at Boozt24 depend on various factors, including your annual turnover and payment term. Based on your average outstanding invoices, we determine a suitable financing limit, for which we calculate a fee based on the limit and its usage. This fee usually amounts to less than 1% of your turnover. Because we offer financing over the entire portfolio, we are one of the most affordable factoring companies.
On the other hand, other factoring companies charge costs per invoice, with rates starting at 1.5% and can go up to 6% of the invoice value.
How does selling invoices work at Boozt24?
To make the process of selling your invoices to Boozt24 clear, we have created an overview of how this process works:
Send your invoice to the customer via e-mail.
These invoices are automatically processed in our system.
After approval you will receive your payment within 24 hours.
Immediate access to working capital and full focus on the growth of your company!
Do you want to know more about how Boozt24 works? Have a look on our method page
What are the conditions for selling invoices?
At Boozt24 we find it very important that your company can grow undisturbed. However, there are some conditions that you must meet before you can sell your invoices to Boozt24. Are you suitable? Then you must meet the following conditions:
1. Your company is in business for at least two years and you can prove this with annual reports;
2. You are active in the B2B-market;
3. You will generate a turnover of at least €500,000 this year;
4. You have an outstanding debtor balance of at least €50,000.
“My debtors always pay” is a frequently heard statement by entrepreneurs. Yet the reality is a bit more stubborn. Debtors do not always pay on time.
Working capital is the financial resources available to finance day-to-day operations, make investments and pay off debts. It is important for a company's liquidity and financial health. Improving working capital can be achieved by shortening customer payment terms and minimizing inventory levels.