Whenever a company sells its goods or services, it should always be a cause of celebration. Sometimes that celebration is put on hold, however, such as when a buyer purchases something on credit. In that instance, the business has made the inventory sale but has not yet received money from the sale. The money is technically there, but not accessible until the buyer’s payment is submitted.

It does not have to be that way, however, thanks to the invoice financing solution. Businesses that need funds sooner than later can use invoice financing – a practice that lets them enhance cash flow by borrowing money against their accounts receivable (where funds are advanced against unpaid invoices prior to customer payment). The business later repays their financier according to a payment schedule.

Similar to invoice financing solutions, Marketlend’s UnLock solution can help suppliers manage cash flow and accounts receivables by giving their customers payment flexibility, whilst getting paid on time. Keep reading to learn more about invoice financing and UnLock’s role in assisting suppliers and SMEs manage their cash flow.

The UnLock Invoice Finance alternative

As a supplier, remaining financially liquid as you wait for a later payment can be difficult. Our UnLock product makes the waiting a little easier. When your customers buy from you through UnLock, we pay your supplier invoice on its due date. Your customer pays us back on the extended terms they choose.

Some of the benefits you can enjoy when you encourage your customers to pay through UnLock include:

Getting paid immediately

No delayed invoice payments

No more chasing customers over eligible unpaid invoices

Streamline accounts receivable; let us take the credit risk

You can give your customers more time to pay

You can extend your credit terms by 30, 60 or 90 days

Using UnLock as your sole, or at least one of your trade credit services, will allow you to free up capital and reduce resource constraints and costs as you will need less staff to manage your finance functions. Additionally, you can increase revenue turnover and quickly enhance your cash flow because your customers will have more purchasing power.

How UnLock works

At UnLock, our B2B Buy Now Pay Later solution helps suppliers get paid on time. When a customer purchases goods from your small business with UnLock, we’ll pay you on your terms. Your customer repays us on extended terms of their choice. Our solution gives your customers the flexibility to purchase more from you and you don’t have to deal with eligible unpaid invoices – it’s a win-win for both parties.

Offering UnLock to buyers requires no new equipment on your part. We’ll give you point-of-sale materials and a website code so you can show customers that you’re offering the UnLock product as a payment option.

Here are a few additional reasons to consider offering UnLock:

  • Trade accounts made easy: UnLock acts as a trade account for every customer, so they can buy more from you.
  • Get paid straight away: We pay all UnLock Mastercard® purchases immediately and all valid invoices on the due date.
  • Minimise your financial risk: UnLock pays valid invoices the moment they reach their due date.
  • Accounts simplified: We pay you rather than your customers, making your accounts easier to manage.
  • No fees: Your customers pay to UnLock. It’s free for you.
  • Generous limits: We’ll pay any amount within your customer’s UnLock limit.

UnLock Mastercard sales

If your company accepts Mastercard, your business customers can access trade terms right away with their UnLock Mastercard®. You can provide your business customers with the flexibility to buy online or instore. When they pay with their UnLock Mastercard, we’ll pay you the transaction the same day.

UnLock for Suppliers and Invoice Financing

UnLock’s services work in a similar vein to invoice financing. Our goal is to help you as a supplier and business owner improve your cash flow as well as help your business customers maximise their purchasing power.

You’ll find it’s never been easier to manage trade finance when your customers make purchases through UnLock. Once they buy, we pay you on your terms and your customer pays us on their chosen extended terms. Your customers now have the flexibility to buy more from you, and your concerns about overdue invoices are gone. Meanwhile, your customers don’t have to worry about paying a late fee.

Additional benefits suppliers get with UnLock include:

  • Simple trade accounts: We act as a trade account for every UnLock customer, so they can buy more from you.
  • Immediate payments: We pay all UnLock Mastercard purchases right away and all valid invoices on the due date.
  • Reduced financial risk: Once a valid invoice reaches its due date, we pay it.
  • No fees: Your customers pay to use UnLock. It’s free for you.

Both the UnLock product and invoice financing can help shorten the gap between when a customer buys from you and when you’re actually paid. The loan methods differ, however. With invoice financing, suppliers pay a portion of the outstanding invoice amount to their lender as a fee for the loan.

“With UnLock, your invoice is simply paid on the due date.”

With invoice factoring, another alternative to invoice financing and UnLock, the supplier sends its outstanding invoices to a lender. The lender then provides a percentage of the total amount of unpaid invoice value to the supplier (usually between 60% and 85%). The financial institution is now responsible for collecting payments from the supplier’s customers.

After the supplier pays their financier for the full amount of their invoices, the financial institution will return the rest of the 15% to 40% of the funds to the supplier. The debtor pays any associated fees or interest to the lender.

Meanwhile, UnLock’s process is much more straightforward. We pay your customers’ invoices for business purchases and they repay us based on agreed upon payment terms.

What you should know about invoice finance

Given that invoice financing is an alternative lending strategy, businesses should be well-versed
in the differences between invoice financing and traditional bank loans. For example, it may take longer to obtain funds via a traditional bank loan due to credit checks and the waiting period prior to funds being delivered to the borrower.

Meanwhile, invoice discounting (another term for invoice financing) and invoice factoring serve
similar purposes, allowing companies to borrow against upcoming invoices, but operate in
different fashions.

An invoice financing provider typically lends a business up to 95% of the invoice amount. When
the invoice is paid, the business repays the lender, subtracting any fees or interest.

Here are a few things to consider if choosing between invoice discounting and invoice factoring

  • If you’re OK with your customers knowing about the arrangement you have with a financial institution, working with an invoice factoring company could be a suitable option. Invoice discounting is ideal if you prefer to work directly with your customers or if you believe they’d be concerned with a finance company being involved.
  • If you prefer to control payment collection, go with invoice discounting. Factoring is the better option if you’re fine with the financial institution handling collection payments. It’s also a good choice if saving time is important to your operations.
  • Being in good financial standing will make invoice discounting an option for your company. Financiers prefer businesses in good financial health and positive balances for invoice discounting because it’s deemed less risky than factoring. That’s because discounting keeps financiers separated from customers, leaving lenders with less control over the situation. Factoring on the other hand gives a financier direct contact with the supplier’s customers.
  • Invoice discounting is ideal if you want an ongoing relationship with your financier. As a supplier, you’d provide the financier with a monthly invoice report. The report shows the financier how much cash it can advance without too much risk.

Factoring meanwhile works off of the individual invoices a supplier selects. Invoice factoring works well for case-by-case situations where the supplier might just need to bridge the gap between fulfilment and specific invoice payment for large orders.

UnLock understands the challenges business buyers and suppliers face when it comes to waiting on invoice payments or dealing with credit terms that don’t fit with their requirements. UnLock offers them an efficient way to enhance business cash flow by paying Supplier invoices on due date, and online and instore UnLock Mastercard payments immediately whilst offering buyers extended payment terms.

To learn more about how UnLock can help your business increase working capital, talk to one of our experts today.