A guaranteed invoice is a powerful tool for improving sustainable liquidity and business growth. This tool facilitates access to funds received as early payments, improving cash flow and reducing the need for loans and credit.

What is a Guaranteed Invoice?

In Bancoli, a Guaranteed Invoice results from offering an early payment discount while creating a new invoice in Bancoli’s multi-currency invoicing tool. Here’s how it works:

  1. Invoice creation: You create an invoice using Bancoli’s multi-currency invoicing tool. Include details like the recipient’s information, payment amount, and due date.
  2. Early payment discount option: You can include a prompt payment discount before finalizing the invoice. This discount incentivizes your client to allocate the payment funds before the invoice maturity date or a specified period to take advantage of the reduced amount.
  3. Client’s choice: If your client decides to pay early for the discount, they deposit the payment amount to fund your invoice. When this is done, one of the two available types of guaranteed invoices is created. This means the funds are now secured and can be accessed as part of your business revenue.
A businesswoman presenting a document symbolizing discount opportunities available through Bancoli's invoicing tool.

Here’s an example:

  • Invoice Details: You, the supplier, are issuing an invoice for $10,000, due on February 25, 2025.
  • Early Payment Discount: You offer a 5% discount if the client pays by February 5, 2025. If the client chooses to pay early, they would deposit $9,500 to fund the invoice’s payment.
  • Result: Upon receiving this early payment, a Type 1 Guaranteed Invoice is created. You can now access the $9,500, providing early cash flow without waiting until February 25.

The Benefits of Guaranteed Invoices

Guaranteed invoices offer numerous advantages that enhance a company’s financial stability and operational capabilities. They provide improved cash flow based on accounts receivable, simplicity with no additional debt, and flexibility in financing.

Improved Cash Flow

Flying currency bills representing increased global cash flow, a benefit of using guaranteed invoices.

Receiving early payment on invoices before maturity dates fills the cash flow gap that often arises when customers take longer than expected to complete payments. This gap can be significant, as a study by Atradius found that 25% of the total value of B2B receivables in the Americas is overdue, highlighting the prevalence of late payments.

For example, consider a company with $100,000 in accounts receivable and 30-day payment terms. If customers pay on time, the company will have a positive net cash flow of $100,000 after 30 days.

However, if customers pay 30 days late, the company’s cash flow statement will show a $100,000 gap in cash generated from operating activities. This delay can impact the company’s ability to invest in growth initiatives, pay operating expenses, or address unexpected costs.

Simplicity with No Additional Debt

Guaranteed invoices are an excellent option for businesses of all sizes, enabling them to reinvest funds quickly and efficiently. They are not classified as loans or credit, so they don’t add long-term debt to a company’s balance sheet, protecting credit lines and improving financial ratios monitored by investors.

This is particularly important for small and medium-sized businesses (SMBs), which often struggle to access traditional financing. A survey by the Federal Reserve found that 60% of SMBs faced financial challenges, with 35% unable to access the funding they needed.

Guaranteed Invoices vs. Traditional Financing

A balance scale with money and a miniature bank on one side and documents on the other representing the comparison between loans and credits, and accessing guaranteed invoices.

Guaranteed invoices significantly advance trade finance, immediately relieving businesses dealing with late payments. They offer several key advantages over traditional financing methods:

  • No debt: Guaranteed invoices are not treated as debt since they come from accelerated revenue.
  • No interest: According to a Fundbox report, businesses can avoid paying interest on late payments, saving an average of $3,000 annually.
  • Speed and ease of access: Funds are available when the client allocates them, without extensive documentation or processing times, which can take days or weeks with traditional loans.
  • Flexibility: Business owners can select which invoices to finance based on their cash flow needs, controlling their finances and planning for future expenditures. This selective financing enables businesses to manage their cash flow better without incurring additional debt or influencing their leverage ratios.

Stronger Commercial Relationships through Guaranteed Invoices

Guaranteed invoices offer immediate financial benefits and can fortify commercial relationships between suppliers and their customers. A study by Paymerang found that suppliers offering early payment discounts saw a 25% increase in customer loyalty and retention.

Improved Cash Flow Management

Improved cash flow management is crucial for businesses seeking financial stability. By having early access to their payments, businesses can improve their operating cash flow, ensuring positive cash flows that support the company’s normal operations.

For instance, a company receiving early payment on 50% of its invoices can reduce its Days Sales Outstanding (DSO) by 20 days. Such improvement significantly enhances cash flow. The impact of these changes is reflected in the cash flow statement. The statement shows how early payments from guaranteed invoices affect the net income.

Improved cash flow management leads to better financial health for businesses. Companies can use these extra funds for growth opportunities and operational needs. Efficient cash flow management also reduces financial stress and fosters a steadier financial environment.

Enhanced Payment Terms and Discounting Strategies

Early payment discounts enable businesses to offer more competitive payment terms without jeopardizing their financial stability. A dynamic discounting program or strategy can further optimize cash flows, reducing the need for financing activities and investing activities.

Businesses can improve cash flows by offering a discount rate that incentivizes early payment. This strategy translates to a guaranteed invoice, helping reduce financing costs and increase net flows. Ultimately, this supports the company’s cash position.

For instance, a 2% discount rate for early payment can result in a 10% reduction in interest payments and a 5% increase in cash equivalents.

By leveraging guaranteed invoices and dynamic discounting, businesses can:

  • Improve working capital management
  • Increase cash flows by up to 30%
  • Reduce negative cash flow by up to 25%
  • Enhance financial statement and physical assets
  • Support paying dividends and investing activities

Guaranteed Invoices: The Go-To Solution for Cash Flow Management

A Bancoli invoice displayed on a computer screen surrounded by a calendar and money symbolizing that guaranteed invoices become a go-to solution for business growth.

As more businesses recognize the potential of guaranteed invoices, these tools are set to become the go-to solution for cash flow management. Early payment discounts ensure companies have enough cash to cover operating expenses and investments.

Guaranteed invoices offer a unique combination of speed, flexibility, and risk mitigation. Traditional lenders may struggle to match these benefits. Dynamic discounting and supply chain finance are excellent examples. These strategies enable companies to receive early payment and improve their net income.

The buyer pays promptly, which mitigates risks. More money becomes available for business growth, investments, and financing activities.

Ensuring Financial Resilience and Growth

Guaranteed invoices help businesses navigate the challenges of an ever-changing economic landscape, ensuring financial resilience and growth.

Adaptability is crucial in a competitive market. Effective working capital management can determine a company’s survival and growth. Guaranteed invoices provide:

  • Improved liquidity, reducing financial stress.
  • Enhanced financial planning through predictable cash flows.
  • Increased operational efficiency by minimizing payment delays.
A broken ground bridged by an arrow representing resilience and overcoming financial challenges through guaranteed invoices.

Using Early Payment Discounts to Obtain Guaranteed Invoices

When it comes to facilitating global business revenue, Bancoli has you covered. All the benefits of guaranteed invoices come from Bancoli’s multi-currency tool. This tool streamlines invoice creation in any currency. Also, it includes the option to offer early payment discounts to obtain early access to your funds.

You are granted access to this invoicing tool by registering in Bancoli. It’s integrated into Bancoli’s Global Business Account, a multi-currency account that gives you 11 currency business bank accounts to receive and send business payments in more than 200 countries globally.

In Conclusion

Guaranteed invoices are possible through Bancoli’s innovative multi-currency invoicing tool. They revolutionize business financing by providing immediate access to funds, offering a simpler alternative to traditional loans and credit. By leveraging early payment discounts and dynamic discounting strategies, businesses can:

  • Enhance cash flow and simplify access to operating cash flow, ensuring they have enough cash to cover goods sold and services rendered.
  • Ensure positive cash flow and improve their cash flow statement, clearly showing how much cash is coming in and going out.
  • Bypass complexities associated with loans and lines of credit, making them accessible to companies with poor credit ratings and avoiding costly financing activities.
  • Increase customer loyalty and retention through early payment discounts, which encourage buyers to pay promptly and reduce the cost of chasing payments.
  • Improve working capital management, reduce negative cash flow, and enhance financial resilience, allowing them to invest in assets and drive growth.

With Bancoli’s guaranteed invoices, businesses can unlock their cash flow potential, achieve financial stability, and drive income growth.

Bancoli banner with text: Access revenue faster with Guaranteed Invoices.