Guide: Invoice borrowing for companies

Invoice borrowing made easier

Invoice borrowing is a good option for businesses that need extra funding. It is a solution that gives companies extra funding and access to capital that would not otherwise be available to expand their business.

How does invoice borrowing work?

Invoice borrowing is a concept that includes both the sale and borrowing of invoices. An alternative to sell an invoice is the borrowing of the same. But what does invoice borrowing actually mean, what are the benefits and what does it cost?

In this guide we go through everything worth knowing about borrowing invoices — join us!

• Access your money quickly instead of having it tied up in customer invoices.
• Save time and administrative work by letting us take care of reminders and requirements.

Use invoice borrowing to get paid quickly

Do you usually bill your customers with a credit period of 30 days or longer? In such cases, you should consider borrowing your invoices instead and thus get paid faster. It is easy to do this and you can choose whether you want to use only one invoice for borrowing or multiple invoices at the same time. In addition, you get paid very quickly — often a large part of the invoice amount is paid to you more or less directly!

In invoice borrowing, you can usually borrow up to 80-90% of the invoice amount. The exact amount may vary depending on the invoice lending company and their assessment of the invoice quality and payment options.

By using invoice borrowing, you can get paid quickly and avoid long waits for payments from your customers. In doing so, you effectively improve your company's cash flow and liquidity. This without having to shorten the credit period that you leave to your customers. You can invoice with the same credit period as usual, borrow your invoice and get paid within 24 hours!

Another advantage of using your bill for borrowing is that you don't have to provide any other security. Instead, it is your customer invoices that constitute the security and thus the guarantee of the loan.

In addition, you can get help with all the administrative aspects of invoice management, such as sending reminders when needed. What this means is that you can focus on the core business and profitability and your factoring company will arrange the money!

The Benefits of Invoice Borrowing

The main advantages of invoice borrowing are that:

You get to keep control of your customer relationships. Unlike when you choose to sell an invoice, the borrowing of invoices is a type of factoring where you can follow your usual routines. You simply bill your customers as usual. The only difference is that you place a transfer text on the invoices. The advantage of this is that you get the opportunity to maintain control over your customer relationships instead of giving them up to the factoring company.

Invoice borrowing can be used in combination with business loans. One doesn't have to exclude the other — you can use invoice borrowing in combination with regular business loans. This is beneficial if your company needs a little extra funding. You can choose to borrow your invoices and at the same time also apply for a regular loan with or without collateral.

The threshold is lower than for unsecured loans. Smaller companies in particular can often find it difficult to obtain unsecured loans. In addition, these companies may find it difficult to issue mortgages as collateral for business loans as such assets are usually lacking. But with collateral in the form of an invoice, borrowing is available to the vast majority of companies. The important thing is that the customers you bill have a high credit rating and ability to pay.

How much can I borrow through invoice borrowing?

Invoice borrowing is a popular financing method for businesses that need quick access to capital. By lending their invoices, companies can obtain direct liquidity and thus finance their operations. But how much can you actually borrow through invoice borrowing?

The answer to that question depends on several factors. There is no fixed answer as it depends on your company's specific situation and which invoice loan provider you choose to partner with.

Generally speaking, you can expect to borrow up to 80-90% of the invoice amount. This means that if you have an invoice of SEK 100,000, you can expect to borrow up to SEK 80,000-90,000. The remaining amount represents the invoice borrowing fee charged by the invoice loan provider to provide the financing.

It is also common for invoice loan providers to take into account your business history, credit rating and industry. The more established your company is and the better your credit rating, the more likely you have to borrow a higher percentage of the invoice amount. It is therefore important to have a stable financial history and good payment practices to increase your possibilities of financing through invoice borrowing.

How should I post an invoice loan?

When accounting for invoice loans, you can use either account 1512 Accounts receivable (factoring) or 1510 Accounts receivable. Feel free to contact an accounting consultant if you feel unsure about how to post an invoice that is being borrowed.