Account Payable Financing

What is account payable financing?

Account payable (AP) financing is a type of short-term funding solution that businesses can apply from lending platforms. It is used to improve their cash flow by leveraging on outstanding invoices. Through account payable financing, the lender will pay your supplier the costs required to produce and deliver the goods to you.

Here's how it works:

1. The supplier sends an invoice to you on the purchase of goods or services.

2. You apply for account payable financing and submit the invoice to the lender.

3. Depending on the platform, the lender may pay off the invoice on your behalf or advance the funds to you.

4. You repay the lender plus a fee within a fixed timeframe (usually within 30 to 90 days).

In short, AP financing is highly useful for businesses of various sizes, especially those experiencing temporary cash flow constraints. It allows them to manage their payables strategically, optimise their cash flow, and potentially negotiate better payment terms with suppliers.