Get your invoices funded when you need them.
Get your invoices funded when you need them.
If you are tired of waiting weeks or even months for invoices to be cashed and need a more consistent source of working capital, invoice financing might be something to consider.Invoice financing is a type of borrowing with reduced risk, relying only on customer payments. Unlike other types of business lending, there are no interest rates or secured assets, only a steady stream of revenue that uses invoices you’re waiting for. This guide will take you through how it works.
Invoice financing differs depending on the type you choose. Invoice financing is a type of receivables finance and includes invoice factoring and invoice discounting. Invoice discounting is where you select specific invoices to send to the finance company, whereas factoring involves the finance company having your full invoice ledger and collecting all the debts when they’re due.If you choose specific invoices to finance, you will receive a certain percentage of the invoice, usually between 80-90%, within 24 hours. The remainder of the invoice will be transferred to you when the customer pays, minus the invoice company’s advance fee.Invoice factoring is usually settled monthly, but there are a number of different types you can consider.
Most invoice funding companies will pay you between 80-95% of the total value of your invoices within 24 hours. An advance fee will also be charged, usually between 2-5% of the invoice amount. The exact costs involved will depend on your business, though many invoice funding providers also charge set transaction, exchange and discount fees.
If you are in Manufacturing, Wholesale, Logistics, Distribution, Transport & Labour hire, has been in operation for more than 9 months and have turnover for $200k or more, using a cloud based Accounting package like Xero, Myob, Quickbooks or Netsuite then we can help you.
Invoice financing suits a range of businesses, including:
Late payments to small businesses are a real issue and invoice financing offers a way to ensure businesses get paid on time. It also helps with planning as they know how much they will be charged to bring forward invoice payments.
Invoice financing is also used by larger businesses and corporations as a cash flow tool to ensure late payments do not negatively affect the running of the business.
Cash flow can be tricky for all businesses, but this is true for seasonal businesses in particular. Invoice financing offers a way for businesses with seasonal lulls to bring forward payments to keep things moving.
If your business is not eligible for other types of finance, invoice financing is something to consider. It’s less risky for the finance company to lend to you because the loan is essentially secured by the invoice.
