Working capital financing is when a business borrows money to cover relatively small expenses such as day-to-day operations and payroll, rather than the purchase of equipment or real estate. This is a common practice for businesses with an inconsistent monthly cash flow as well as growing companies that are taking bigger projects than usual. Working capital financing is a simple cash flow solution that allows businesses to keep working while they get paid for an ongoing project or goods sold on credit.

Working capital financing options

There are several ways of financing working capital. The most common ones are traditional bank loans, overdrafts, lines of credits, and business credit cards. However, most of them are quite difficult to get as banks usually ask for big collaterals.

Invoice factoring is a great way of financing working capital.

Invoice factoring refers to the process in which a business sells its account receivables or unpaid invoices to a third party. The business usually gets around 80% of the invoice value right away, and the rest of the money (minus fees) when the buyer pays for the goods or services received. Invoice factoring, also known as invoice discounting and invoice financing, is a quicker solution for small and medium-sized businesses who need quick access to cash. It usually doesn’t require collaterals and the transactions are verified and approved in just a few days.

Invoice factoring with Velotrade

Velotrade is an online platform that allows businesses who want to sell invoices to connect with investors who are looking to buy invoices. Through this marketplace, invoices can be uploaded and put to auction. When the investors make an offer and win the auction, they usually transfer the funds within a few days. One of the many benefits of selling invoices using Velotrade is that we only work with professional investors, as defined in Hong Kong’s Securities and Futures Ordinance.

Despite being based in Hong Kong, Velotrade supports many currencies and accepts businesses from all over the world, as long and they are a registered business.