Invoice purchasing – how it works, what it costs and when it is the right choice for your company
Invoice purchasing has quickly become one of the most popular financing solutions among Swedish companies looking to improve their cash flow without taking out loans or mortgaging their accounts receivable. By selling invoices, you get paid immediately, reduce the risk of customer losses and free up capital to grow.
In this guide, we go over how invoice purchasing works, what it costs, when it is particularly advantageous and how you book it.
What is invoice purchasing?
Invoice purchasing means that you sell one or more customer invoices to a finance company and get paid immediately – often the same day. The finance company takes over the administration and waiting for payment. You get liquidity without taking out a loan and without burdening your balance sheet.
There are two types of invoice purchases:
Invoice purchase without recourse – the finance company takes the entire credit risk
Invoice purchase with recourse – you may be able to get a chargeback if the customer doesn't pay
Advantages of invoice purchasing
Invoice purchasing offers several clear advantages:
Up to 98–100 % of the invoice value paid
Fast liquidity – get paid immediately instead of waiting 30–90 days
No debt – does not affect the balance sheet like a loan
Reduced administration – the finance company handles reminders and debt collection
Reduced risk – in the case of invoice purchases without recourse, the finance company takes the entire credit risk
Flexibility – choose which invoices you want to sell and when
Stronger cash flow – perfect for growth, seasonal variations or large projects
How does invoice purchasing work in practice?
- You send the invoice to the finance company
- The finance company makes a credit assessment of the customer
- You will be paid up to 98–100 % of the invoice amount immediately
- The customer pays the finance company on the due date.
You don't have to wait – and you avoid the risk of invoice purchases without recourse.
How much does invoice purchase cost?
The cost depends on:
customer's creditworthiness
invoice size
payment terms
whether it is an invoice purchase with or without recourse
A fee of 1–4% of the invoice amount is common.
Examples of when invoice purchasing can be extra advantageous
Newly established companies
New businesses often have uneven cash flow. Invoice purchasing frees up capital quickly and provides a more secure start.
Seasonal operations
Businesses with irregular revenue can smooth out cash flow and avoid liquidity stress during the off-season.
Growing company
When demand increases, more staff, materials or production are often needed. Invoice purchasing provides immediate capital so you can act quickly.
Project-based activities
Consultants, construction companies and other project companies are often paid in lump sums or lift plans. Invoice purchasing provides more consistent access to working capital.
Which invoices can be sold?
Generally, you can sell invoices as:
are issued to businesses (B2B)
refers to goods delivered or services performed
are not disputed
has clear payment terms
How do you post invoice purchases?
Accounting is simple:
- Post the invoice as an account receivable when you create it
- When you sell the invoice, you write off the receivable.
- The payment is booked as a decrease in accounts receivable and an increase in cash and cash equivalents.
- The fee is booked as a financial cost, e.g. on account 6064.
This makes invoice purchasing a transparent and smooth solution even from an accounting perspective.
Is invoice purchasing right for your business?
Invoice purchasing is a flexible solution for companies that:
want to improve cash flow
want to avoid credit risk
want to avoid loans
need access to capital quickly
want to focus on operations instead of administration
For many companies, invoice purchasing is the easiest way to free up capital and create stability.
Contact us for a customized solution
Do you want to know what invoice purchasing would cost for your company?
Contact Finance Partner We will help you find the best solution for your cash flow.