Accounts Receivable Financing (ARF) or previously known as Invoice Financing (IF), is a product where the sellers (“Issuer ” in this case) sell their future receivables or invoices that the seller's issue to their customers (“Buyer”) to get immediate cash. When the buyers pay these invoices, Investors who bought these future receivables would receive the full payment and make a return.
Tenor is in the range of 15 days to 120 days, with bullet payments of full principal and returns to be repaid at the end of the tenure.
Issuers can pay anytime within the tenor and there is no early payment fees. If the listing is repaid early, Investors will receive pro-rated returns according to the days of fund utilized.
For example, when an Issuer made an early full payment 20 days after the fund is disbursed, the returns rate Investor received will be 20 days returns . The 20 days returns received is calculated as:
[ (returns rate per annum / 360 days) X 20 days ]
Our Accounts Receivable Financing listings comprises two types of disclosures. For your ease of reference, we segregate our product code based on below:
Where the buyer is notified that the invoice has been assigned to us for the issuer to obtain financing in advance. In this case the buyers will pay directly to the escrow account, bypassing the issuer and reducing the chance that the issuer would use the funds for other expenses. The reduced risk means that notified invoice financing listings are often offered with lower returns rate than an invoice with non-notified disclosure. Partial payments is a common thing for notified notes, as the buyer will make payment as and when they have funds.
Where the buyer is not aware that the issuer has assigned the invoice to us for financing. The buyer will continue to liaise with the issuer and pay directly to them. Once the issuer receives the payment from their buyer, they make the payment to us. In case their buyer pays them late, the issuer is still liable to pay late returns and penalty fees for late payment to investors.