Invoice Financing at First Hawaiian Bank

Invoice Financing at First Hawaiian Bank is a working capital solution designed to help businesses convert unpaid invoices into immediate cash. This product is tailored for companies that experience seasonal demand, rapid growth, or cash flow gaps caused by extended customer payment terms. By unlocking the value tied up in receivables, businesses can accelerate growth, cover payroll and vendor payments, and take advantage of timely opportunities without waiting for invoices to be paid.

How It Works

Invoice Financing provides funding secured by your outstanding invoices. Instead of waiting 30, 60, or 90 days for a customer to pay, the bank advances a percentage of the invoice value up front. Once the customer pays, the remaining balance is remitted to your account after fees and interest are collected. The process typically involves:

• Submitting eligible invoices or accounts receivable to the bank.
• Underwriting and verification of invoices and customer creditworthiness.
• Receiving an advance — often a significant portion of the invoice face value — within a short time frame.
• Repayment upon customer payment, with the bank remitting the reserve balance less fees.

Key Benefits

• Improved cash flow: Convert receivables into working capital to meet operational expenses without taking on long-term debt.
• Flexible capital: Funding grows with your sales; the more invoices you generate, the more financing becomes available.
• Fast access to funds: Advances are typically provided faster than the time required to obtain traditional business loans.
• Preserve ownership: Invoice Financing is not equity financing, so owners retain control of their business.
• Support for growth: Use proceeds to invest in inventory, hire staff, expand operations, or seize new opportunities.

Typical Features

• Advance rates: A percentage of the invoice value advanced up front. Advance rates vary depending on the credit quality of the invoiced customers and other underwriting factors.
• Credit assessment: Approval often depends more on the creditworthiness of your customers than on your business’s credit history.
• Fee structure: Structured as a combination of discount fees and interest charges; specific pricing depends on deal size, industry, and risk profile.
• Recourse and non-recourse options: Depending on the arrangement, the bank may require recourse to the business for non-payment, or provide non-recourse coverage for certain credit risks.
• Integration: Services can typically be structured to work with existing accounting and invoicing systems, improving operational efficiency.

Who Can Benefit

Invoice Financing is especially useful for:

• Manufacturers and distributors with long production and payment cycles.
• Service providers and contractors working on milestone-based billing.
• Wholesale and retail businesses managing large purchase orders.
• Exporters managing international accounts receivable with extended payment terms.

Whether a small business or a mid-sized enterprise, organizations that invoice reputable customers and want a predictable, revolving source of liquidity can find value in this product.

Eligibility and Documentation

While specific requirements vary, applicants can generally expect to provide:

• Recent financial statements and bank statements.
• Aged accounts receivable and copies of invoices to be financed.
• Customer credit information and any existing contracts or purchase orders.
• Business formation documents and authorized signatory information.

The underwriting process includes verification of invoices, review of customer payment history, and assessment of the overall credit risk associated with the receivables.

Process and Timeline

The onboarding and funding timeline can be summarized as follows:

1. Initial consultation to outline needs and determine product fit.
2. Submission of documentation and detailed invoices for review.
3. Underwriting, which includes verification of invoice authenticity and customer credit evaluation.
4. Agreement execution, setup of any required accounts or controls, and system integration if applicable.
5. Funding of advances upon submission and approval of eligible invoices.

Many businesses receive initial advances within days of agreement execution for pre-approved invoices; subsequent advances can be processed on a recurring basis depending on operational needs.

Risks and Considerations

Invoice Financing can be an effective tool, but businesses should consider:

• Cost: Fees and interest may be higher than some traditional financing, particularly for higher-risk receivables.
• Customer relationships: Depending on the structure, customers may be notified that their invoices have been assigned. Transparent communication can help preserve relationships.
• Concentration risk: Relying heavily on a small number of large customers may affect pricing and availability of funding.
• Documentation and controls: The bank typically requires consistent documentation and may implement reporting and control requirements.

Frequently Asked Questions

Is invoice financing the same as factoring?

They are similar but distinct. Factoring usually involves the sale of receivables to a third party, while invoice financing can take the form of a secured loan against receivables. The exact structure and responsibilities differ depending on the agreement.

How quickly can I access funds?

Timing varies by case, but once accounts are verified and the facility is established, advances on approved invoices can often be made within a few business days.

Will my customers be contacted?

Some structures require notification to customers; others are arranged without direct notification. The approach is negotiated as part of the agreement and balanced against credit and operational considerations.

Getting Started

To explore whether Invoice Financing at First Hawaiian Bank fits your working capital strategy, prepare recent financials and a sample of customer invoices. A consultation will clarify eligibility, discuss potential advance rates and fee structures, and outline next steps. Proper planning helps integrate financing with billing processes and ensures the solution supports short-term liquidity needs and long-term business objectives.

Invoice Financing can be an effective, flexible tool for turning receivables into predictable cash flow, enabling businesses to operate with greater stability and seize growth opportunities when they arise.

Address Bank: First Hawaiian Center Honolulu, Hawaii, US, USA
Bank: First Hawaiian Bank
Headquarters: Honolulu
Products: Business Financing
Type: Invoice Financing