Invoice Trading
A means of raising funds from your invoices by selling them to investors.
This form of invoice financing is based on the principle of peer-to-peer lending, and entails businesses using invoice trading platforms to sell invoices to investors - such as institutional investors, asset-based lenders, high street banks, cash-rich companies or high net worth individuals - to free up cash.
Invoice financing done peer-to-peer
Invoice trading works on the basis of businesses auctioning their invoices individually or in bundles to the bidders, who compete to offer them the most competitive price to advance them the funds. The seller then purchases back the invoice from the buyer, choosing whether to do so after 30, 60 or 90 days.Practical Application Example
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Once a business applies online and is accepted to be a member of its preferred invoice trading platform, it will be able to set up a client bank account and sell an invoice on the platform. Multiple investors are invited to purchase slices of the invoice, with the selling business receiving an advance of up to 90% of the invoice value within 24-28 hours. When the customer pays the outstanding invoice into the client bank account, the invoice trading platform gives the business the remaining balance, deducting its own fees. ”
