Accounts Receivable (AR) Financing and Accounts Payable (AP) Financing both help Singapore SMEs manage cash flow, but they sit on opposite sides of the same problem. AR financing lets you borrow against invoices your customers have not yet paid. AP financing lets Funding Societies pay a supplier’s invoice for you, so you can settle a purchase now and repay over a short period.

This guide to accounts payable vs accounts receivable financing explains how each one works, how they differ and who can apply.

Accounts payable vs accounts receivable financing: key differences

AR financing AP financing
What it finances Invoices your customers owe you Invoices you owe your suppliers
Who receives the cash You Your supplier, paid by Funding Societies
Credit line Up to S$1 million Up to S$500,000
Share of the invoice financed Part of the invoice value 100% of the supplier’s invoice
Repayment period Up to 120 days Up to 90 days
Who can apply Singapore-registered Pte Ltd or LLP, at least 30% held by a Singapore Citizen or PR, operating for at least 6 months Pte Ltd or LLP operating for more than 12 months, with no more than 30 days past due on current or previous Funding Societies facilities

Terms as shown on the product pages at the time of writing. Approval and terms are subject to assessment.

What is AR financing?

Accounts Receivable Financing (formerly Invoice Financing) is a credit line you draw on against your unpaid customer invoices. Instead of waiting 30, 60 or 90 days to be paid, you draw funds now and repay the drawdown, plus fees, within the agreed tenor of up to 120 days.

For example, you invoice a customer S$50,000 on 60-day terms. Rather than wait two months, you draw against that invoice to cover payroll and stock. How much you can draw depends on the invoice and your approved credit line.

What is AP financing?

Accounts Payable Financing lets you pay a supplier’s invoice without using your own cash. Funding Societies pays the supplier 100% of the invoice, and you repay over a period of up to 90 days.

For example, a supplier invoices you S$50,000 and wants payment on delivery. Funding Societies pays the supplier in full and you repay over the agreed period. Paying a supplier upfront can also put you in a stronger position to ask for a discount.

Who can apply?

AR financing

  • Business registered in Singapore as a Pte Ltd company or LLP
  • At least 30% held by a Singapore Citizen or Permanent Resident
  • At least 6 months of operating history

AP financing

  • Pte Ltd company or LLP
  • More than 12 months of operating history
  • No more than 30 days past due on current or previous Funding Societies facilities

Which should you choose?

Choose AR financing when your cash is stuck in invoices that customers have not paid. Choose AP financing when the pressure is on the supplier side, for example when a supplier wants payment upfront. If you are comparing invoice financing with a conventional loan, read our guide to invoice financing vs traditional loans. For every option side by side, see our guide to business loans in Singapore.

Ready to apply? Apply for Accounts Receivable Financing or apply for Accounts Payable Financing.

Frequently asked questions

What is the difference between AR financing and AP financing?

AR financing advances you cash against invoices your customers have not yet paid. AP financing pays your supplier’s invoice for you, so you can settle a purchase without using your own cash, then repay over a short period.

How much can I borrow with AR financing and AP financing?

Funding Societies offers an AR financing credit line of up to S$1 million and an AP financing line of up to S$500,000. The amount you are approved for depends on our assessment of your business.

How long do I have to repay?

AR financing tenors go up to 120 days. AP financing tenors go up to 90 days.

Who can apply for AR financing and AP financing?

For AR financing, your business needs to be registered in Singapore, with at least 30% held by a Singapore Citizen or Permanent Resident and at least 6 months of operating history. For AP financing, you need to be a Pte Ltd company or LLP with more than 12 months of operating history and no more than 30 days past due on current or previous Funding Societies facilities.

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.

Accounts Receivable Financing and Accounts Payable Financing are fulfilled by FS Capital Pte Ltd.

Dorcas Pang
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