Irrespective of whether you are a small business, or you are one of the corporate giants, managing cash flow is difficult for almost everybody. Amidst the hectic work schedules coordinating the invoicing cycles can be extremely overwhelming. But aren’t invoices important to meet the working capital needs? Well, yes they are. However, if you are falling short of capital because your pending invoices are sitting ideal on your desk, then financing those invoices can be a brilliant option.
Instead of waiting for days, weeks or months to be paid by a customer, now you can release up to 95 per cent of the value of your invoice within a day of its issue. Invoice finance allows business owners to avail advance payments by submitting their cleared invoices as a safety statement or collateral.
Who is eligible for Invoice Financing?
Note that all enterprises aren’t eligible to avail invoice finance. In order to be eligible, an enterprise must:
● Have an outstanding invoice against other Australian enterprise entities.
● Provide an active ACN or ABN, and
● Show the proof of delivery necessary for the issued invoices.
Delimitating aspects of invoice financing
● The loan amount in invoice financing ranges from $5k- $150M
● Pre-approval time for the financing option is 24 – 72 hours and the unconditional approval and settlement time is 7-10 days
● The interest rates in invoice factoring starts from 4.95% p.a
● No real estate collateral is required for the financing process. The loan can be secured against current assets of the business
The documents required in obtaining invoice financing include:
● ATO statements
● Previous 6-12 months bank statement
● Valid identification proof
● A sample invoice attached with proof of delivery
Perks of Invoice financing for businesses
Invoice financing presents a unique range of benefits for businesses of all sizes. Unlike other sources of business finance like secured business loans, invoice financing allows companies to raise quick cash without losing collaterals or business opportunities. Companies can leverage the invoice financing option to get liquid cash readily as soon as the invoice is issued. With invoice financing, businesses can:
● Quickly release the funds tied up in their invoice in a better position. So, they can cover business expenses and capitalise on new opportunities that sail along.
● Waiting for weeks and days to clear payments can significantly stunt the growth of small businesses. However, with invoice financing businesses can extend their payment terms to their customers without wondering about the detrimental impact on the cash flow.
● Unlike the unbelievably intricate sources of business funding, invoice finance is relatively easy to qualify for. Most enterprises that don’t have major financial issues work with reliable customers and factoring in a suitable source of finance with invoice financing can help businesses to meet customer expectations.
● The amount that you can borrow with invoice financing can grow in line with your business and you can get more capital than what you could possibly get from a bank with an unsecured business loan.
● You don’t need to make repayments. The cash advance gets settled against receipt of payments from the buyers.
The bottom line
Having a steady cash flow is imperative for a business to grow and prosper. Combating financial crises is already tough and during tough financial times, invoice financing can enable business owners to focus on acquiring new customers instead of chasing the debtors. So, opt for invoice financing, get paid immediately for your invoiced cash and put back your business on the go while increasing turnover and profits.
Looking for a reliable invoice financing company or for secured business loan? Search with a trustworthy finance broker.
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