What is Accounts Payable Financing and how does it help businesses?

One of the major constraints to the growth of small and medium enterprises (SMEs) is the lack of or limited access to business financing. Many times, SMEs struggle with balancing the hassle of taking on business loans and the need to purchase inventory. However, working capital is crucial for business to continue.

There are various kinds of business financing available in the market, and Accounts Payable (AP) financing is one of the fastest customisable ways to finance the specialised equipment business owners need. AP financing is a powerful tool; when used correctly, it can create more opportunities for businesses to expand.

What is AP Financing?

AP Financing finances a business’ purchase of goods from a supplier. The payable is a short term I Owe You (IOU) from the business who is looking to purchase goods to the supplier who provides these goods. In the supplier’s books, the outstanding debt would be recorded as an accounts receivable item. The payment will be made from the financier directly to the supplier based on the purchase order invoice issued to the business, without the business having to make any payment upfront.

AP Financing can be an important tool in controlling a company’s finances. If the AP facility used increases over time, the company is buying more goods or services on credit rather than paying with cash. By making use of AP financing, businesses can unlock more working capital while easing their own cash flow. AP financing is, therefore, an effective and popular option for SMEs who need a quick and effective way to finance their purchases.

Why is AP Financing important?

AP financing works effectively for small business owners in a wide variety of industries. This type of financing helps fill the gap in cash flow between paying for business costs and maintaining a healthy working capital.

It enables SMEs to convert invoices from their supplier(s) into SME working capital, making it a sought after short term financing option for companies that must meet deadlines, deal with late payments from clients, or land new contracts and projects.

Funding Societies’ AP Financing

Funding Societies offers two types of accounts payable facilities to choose from, Express AP Financing and AP Financing.

• Express AP Financing is best for SMEs who want to make small purchases and require a facility quickly, hence the name “Express”. With less than four documents required for application, SMEs can get a limit of up to S$100K and a tenor of up to 60 days. Some of the common industries we have seen taking up this facility are in Retail and F&B.
• AP Financing is suitable for SMEs with large purchases. Although more documents are required for credit assessment, SMEs can get a limit of up to S$500K and a tenor of up to 90 days. Common industries taking up this facility are those in Wholesale Trade and Manufacturing.

Funding Societies only disburses financing to corporations, so your supplier needs to be a registered company. We do not disburse financing to individuals.

How does Funding Societies’ AP Financing Work?

So you have decided that the accounts payable facility is what your business needs. How should you proceed?

Step 1. Apply for Express AP Financing or AP Financing

Make sure you have all the necessary documents ready and can afford the payments on the amount you do borrow. You do not want to overextend yourself financially.

Remember that when you make use of our facility, you do not just repay the principal. You also pay interest* on the money you borrow.

When applying for Express AP Financing or AP Financing, you will need to have at least three of these documents to apply.

• Latest six months’ operating bank statements.
• Director(s) and Shareholder(s) NRIC or Passport, latest two-year NOA and CBS report.
• Latest one set of payment trail (Supplier’s Invoice + Payment records).
• Additional documents may be required and are determined on a case-by-case basis. Our team will reach out to you once your application is received.

Step 2. Make use of the AP Facility

After deciding which type of financing you will go for, provide Funding Societies with the payable invoices. 

Step 3. Funding Societies covers your supplier cost upfront

Once we have received your supplier’s invoices, we will pay 100% of your billed amount to your supplier within three days. 

Step 4. Make your Repayments

All funds must be paid back over a set term, usually 60 to 90 days. 

We understand how hard it is for businesses to maintain fluid cash flow for operations. With Accounts Payable Financing, you can now obtain the funds you need to scale your small business! 

SME - Explore Now!

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*Final interest rates on all financing are subjected to credit underwriting.

Fulfilled by FS Capital Pte. Ltd.

Disclaimer: The information provided to you in this blog post is intended only for general information purposes only and does not constitute legal or other professional advice on any subject matter. The materials and the information provided are not intended to be and do not constitute an advertisement or solicitation. In no event will Funding Societies be liable to any party for any direct, indirect, incidental, special, consequential or punitive damages for use of such information by you or any unauthorised third party.