Invoice Finance - The Smart Way To Give Your Business a Competitive Edge
Keeping the cash flowing into your business can be a challenge. Australian SMEs are often paid 30+ days after invoicing and sometimes up to 60 days. That can be a big gap to breach when you have wages, contractors, suppliers and overheads to pay. Having good access to additional funding can make a huge difference when it comes to growing your business.
What is Invoice Finance?
Invoice finance, (also known as factoring) involves borrowing against the value of your outstanding invoices. At Invoice Money, this can mean funding a single invoice, a single debtor or even an entire receivables ledger. We advance you up to 90% of the value of the outstanding invoice/s and your client then pays us when your invoice is due. We then transfer you the balance outstanding, less our fees.
Invoice finance is widely used in the UK and USA and is being increasingly utilised by SMEs in Australia.
Unlocking the cash tied up in your debtors accounts can give your business a competitive advantage and enable you to invest, grow and take advantages of business opportunities. These are the 8 ways in which invoice finance can give your business a competitive advantage.
Maximise your Cash Flow
Effectively, by borrowing against your outstanding invoices, you get paid immediately. This can be 30-60 days earlier than you would have seen the cash in your bank. This could be used to fund extra stock, buy additional raw materials or pay wages or contractors.
Give Your Customers Credit
We hear from many business owners that want to offer new and bigger customers credit terms, but worry about being able to afford this. When you can borrow against the value of the invoice, the time lag in getting paid is no longer an issue.
Flexible Funding
Use the facility as much or as little as you want. You are not locked into repayments or contracts.
Other methods of finance would involve contracts, and repayment schedules of principle plus interest. With invoice finance, you can use the facility just when you need it or all the time. It is completely flexible.
Finance that Grows with you
The more sales you make, the more funding you can access. Invoice finance is not tied up with historical sales records. The more you invoice, the more you can borrow.
Quick Access to Funds
Utilising invoice finance gives you fast access to working capital to be able to grow your business and take on new opportunities. This is particularly true if you compare it to getting a business loan from a bank which may take several weeks to arrange the relevant documentation to get it approved.
Access Bulk Buying Discounts
With more cash in the bank quickly, you can talk to your suppliers about making bigger orders of raw materials or stock. This can help you gain a bigger profit margin on your sales.
Better handle Business Seasonality
Invoice finance can help you maximise your cash flow during peak periods.
Imagine being able to take on additional contractors to help you out during your busiest times. Your business gets more done right at the time you are the busiest, enabling you to make more sales.
Having an invoice finance facility can give your business the edge over your competitors. This is particularly true when they are funding their working capital in more traditional methods. They are stuck with repayment schedules and long approval times. In the meantime, you free up the cash locked in your debtors accounts and snap up all the business opportunities that come knocking!
To find out more about how we can help SME businesses grow with invoice finance, give our friendly team a call. Our experts will walk you through how an invoice finance facility can work for your business.
Invoice Money is the Invoice Finance provider of choice for SMEs. To see how Invoice Money can help your cash flow contact our friendly team here.