Invoice discounting is a process in which a business sells an invoice to a third party, usually called a financing company. Immediately after selling an invoice, the business gets a percentage of the amount billed to the client while the financing company takes on the responsibility of collecting the full payment from the buyer.
By selling their invoices, businesses can get quick access to cash, improving their cash flow and working capital cycle.
Invoice discounting is a common financing method used for businesses that don’t want to or can’t wait for their clients to pay their bills. It is a very popular alternative to traditional forms of finance such as loans and overdrafts.
How does invoice discounting work?
- A business sells a good or provides a service to a customer.
- The seller invoices the client, giving them up to 120 days to pay.
- The business then sends the invoice to a third party, usually called a financing company.
- The financing company buys the account receivable from the business. Funds are made available at a certain percentage of the face value of the invoice (~80%).
- When the customer makes a payment, the balance of the invoice is remitted back to the business, minus a service fee.
How much does invoice discounting cost?
Use our calculator to determine how much you’d have to pay when using Velotrade’s Invoice Discounting Platform. You can get a glimpse of the fees down below.
|Invoice value||Days financed||Today you will be advanced*||At maturity of invoice you will receive the balance of|
*Invoice discounting fees depend on several factors such as the invoice value, the days financed, the creditworthiness of the debtor, and the length of the commercial relationship.
What are the advantages to invoice discounting?
- Invoice discounting accelerates cash-flow.
- Businesses don’t need to own any high value assets in order to attain funding. (No collateral assets required).
- It’s available to big and small-sized businesses that might have been denied traditional bank finance in the past.
- It’s usually arranged confidentially, which means the clients won’t know the invoice has been sold.
- The financing company adapts to the company’s business requirements, offering a flexible finance solution.
Check out our FAQ page if you have any more questions.
Why use Velotrade, versus other invoice discounting companies
Velotrade is the web-based invoice discounting solution to provide you with immediate cash flow by selling your outstanding invoices. We provide companies around the world accessible and reasonable ways to financing. Our partners, including Euler Hermes, GBG, Experian, and Dow Jones Risk and Compliance, help us bring together businesses willing to sell their trade receivables to investors willing to advance funds.
We keep up to date with the latest eCommerce and FinTech innovations by attending and participating in numerous events. If you want to learn more about us and what we are doing, check out our news section.
Velotrade is regulated by the Securities and Futures Commission of Hong Kong, which maintains and promotes the fairness, efficiency, competitiveness, transparency, and orderliness of the securities and futures industry in Hong Kong. This means that all transactions are legit, fair and secure.
While based in Hong Kong, Velotrade welcomes businesses from anywhere in the world as long as they are a duly registered company in a country acceptable for the qualifying criteria set by Velotrade. Some of these criteria are verifiable trading history, satisfactory credit standing, and total turnover.
Apply for financing right now!
If you are a registered company that’s been in business for 1 year generating turnover of over 1 million dollars (USD) and your client has a solid credit history and has been in business for at least 3 years generating turnover of over 20 million dollars (USD), then you can discount your invoices using Velotrade today!
We have a list of accredited investors ready to provide funding. Start the process now and get your SME on the right track! If you have any queries, you can contact our team online, or give us a call on +852 5808 3777.
All online processes through the Velotrade platform and it works as follows:
- Register your company (first time only)
- Create a new auction for the invoice you want to discount
- Velotrade verifies the details
- Investors buy your invoice
- Funding is transferred to your bank account after the auction is complete
Are you an investor?
With Velotrade, you can invest in high-yielding assets insured against default risk, without long-term capital commitment while also supporting the economy. Learn more about our innovative online invoice trading platform for investors here.