What Is Invoice Financing?

Domestic invoice financing refers to the fact that the domestic seller (borrower) does not surrender the debts of the accounts receivable, using the invoices generated in the domestic commodity transactions as the voucher, and using the invoices corresponding to The first source of repayment is short-term loans provided by banks. For domestic invoice financing, it must be based on real and legal transactions and the debt and debt relationship.

Domestic invoice financing

(1) Invoice scope for domestic invoice financing:

1. VAT invoices issued for the sale of goods to corporate entities.

2. Invoices issued for the sale of goods to legal entities such as schools and hospitals.

3. Invoices issued by government procurement activities organized by government procurement departments at or above the city level (inclusive).

4. Other invoices identified by the bank that can handle domestic invoice financing business.

(2) The invoice and its corresponding accounts receivable must meet the following conditions:

1. The invoice is true, legal, and valid, and the face elements are consistent with the content of the commodity transaction and meet the requirements of the purchase and sales contract;

2. The goods listed in the invoice are the main products of the seller;

3. The repayment period of accounts receivable generally does not exceed 6 months, and the longest does not exceed 9 months;

4. The ownership of the accounts receivable is clear and free of defects. The seller has not transferred it to any other person, nor has it set any pledge rights and other priority rights for compensation for any other person.

(3) The following invoices shall not be used for domestic invoice financing:

1. The account receivable corresponding to the invoice has expired;

2.Buyers and sellers for providing services or transactions

(1) The financing amount shall be comprehensively considered by both the purchaser and the seller

Factors such as credit status of purchasers and sellers, quality of receivables, structure, time limit, payment schedule and prerequisites, expected bad debt ratio, performance of obligations stipulated in purchase and sales contracts, breach of contract and liquidated damages shall be reasonably determined, and generally shall not exceed 80% of the actual amount of the invoice; for buyers and sellers with good credit, stable purchase and sales relations, and good receivables, the maximum amount can be relaxed to 100%.

The actual amount of the invoice refers to the balance of the invoice amount after deducting the payment from the seller.