What is Invoice Factoring and how can it Help Your Business Grow?
As a business owner, you spend a fair bit of time thinking about the question “How am I going to access funds for growth?” Sometimes opportunities to grow by acquisition pop up unexpectedly. Or you may win a new and bigger customer when the operations account is looking lean. Not all businesses are cash flow positive every month. Nor do they always have reserves put aside to invest at short notice.
This article from Smart Company Australia talks to a number of Australian entrepreneurs. They discuss their biggest business purchases and why they made them. There are common themes of investing in people to achieve scale and seizing opportunities as they arise.
To be able to comfortably grow your business, you will need:
Working capital to take on new, bigger customers
Funds for growth by acquisition or inventory or equipment
Smooth cash flows to provide funds for operations
How Can I Finance Growth?
Debtor finance offers solutions to business owners outside the restrictions of secured bank lending. After all, you can’t always put up your house or car as equity! Banks often have minimum turnover requirements for unsecured lending. Bank interest rates for unsecured lending are not always business friendly.
Invoice factoring is a modern alternative to a traditional business loan. It is becoming quite well known as more businesses use it. It is often recommended by trusted accounting advisors.
What is Invoice Factoring?
The invoice financing business is a growing industry that has grown on the back of electronic payments and developments in invoice and communication technology. Lots of Australian businesses are making use of invoice financing solutions and are reaping the benefits.
You may have heard the term invoice factoring referred to as debtor finance, invoice finance or accounts receivable finance.
Invoice Factoring is a type of accounts receivable financing. Effectively, you are getting your invoices paid early for an agreed fee.
Invoice factoring works very simply. You forward either a single or series of outstanding invoices to an invoice finance provider. Once you are approved, they provide you with up to 90% of the value of the invoice.
The financier gets paid directly by your customer. Once your customer has paid you get the remaining balance less agreed fees.
Invoice factoring can quickly provide a business with:
Working capital to enable them to take on new, bigger customers
Funds for growth, inventory or fuel and equipment
Cash flow to provide funds for operations
Smooth lumpy or seasonal cash flows to meet business payment obligations
What does it Cost?
At Invoice Money our fees are between 0.05-0.25% per day of the invoice value.
Is my Business Suitable?
If you are an Australian Small or Medium Enterprise who offers goods or services to Australian businesses, then you may be eligible. You need to be a business that invoices business clients for completed products delivered or services provided. Once you are approved we can provide funds of up to One Million Dollars for eligible businesses.
What is the Benefit of Using Invoice Finance?
1. It’s Quick
Being a small business ourselves, we don’t have to jump through hoops to get customer approvals. We pride ourselves on our quick and painless customer approval process.
2. It is Good Value
There are no application fees, no legal fees, no minimum fees, and no exit fees.
3. It’s Not Debt!
When you use invoice factoring, you are not taking on a loan. You are making use of funds already owed to your business.
Why Choose Invoice Money?
We operate with integrity and confidentiality. We have advanced more than 60M in funds to Australian businesses since inception. Our reputation in the market is first rate and our boutique size means you will never be treated like a transaction.
What’s more, we get to know you and your business. We pride ourselves on our relationships with our regular clients. One of our transport industry clients recently said “I love dealing with a company that is big enough to support us, but small enough to remember our names.”
We offer our clients the ability to use our facility for a single invoice, a series of invoices or all of them! There are no lock in contracts. It is a solution based on work you have already completed for customers you have already won.
There are so many reasons to give invoice financing a try. It really can give you the ability to grow at a faster pace with minimal financial risk. You will wish you did it earlier!
If you are investigating finance options to grow your SME business, look no further. Get in touch with our friendly team to discuss your requirements. You can contact our team in Melbourne or Sydney here.