Improve Cashflow with Invoice Financing

What is invoice financing and how does it compare to the traditional financing options?

Published: 21/05/2018

What Sets Invoice Financing Apart from Other Sources of Business Financing

This might be the understatement of a lifetime, but it’s no simple task to run a business. Business owners are often expected to be front line staff, managers, accountants, marketers, maintenance workers, and sales staff. Plus, while juggling all of those roles, business owners also have to worry about cash flow management to ensure expenses are paid and receivables are collected.

With around 20,000 new companies registered in Australia per month in 2017, there are more and more people looking for finance to help their business grow. Traditionally, banks have been the source of most business finance. However, invoice financing is becoming increasingly popular among business owners who want to have more flexible options when choosing how to finance their business. So, what sets invoice finance apart from traditional financing options?

Invoice Financing is Simpler

If you’re a business owner, then you know there aren’t enough hours in the day to get everything done. Getting a traditional loan is not always a quick, painless task for businesses. The interest rate for any loan is often inversely related to the amount of work you have to do to get it, i.e. almost anyone can get a loan over the counter without much more than an operating business, but the interest rate will be very high. If you work for it and go through the long tedious process of providing credit scores, cash flow projections, business plans, and more, then you “might” get a better rate. These are all important steps but they can take you away from your business and negatively affect the quality of service you can provide to your clients.

When all is said and done, you could spend literally weeks or even a month waiting for financing. Invoice discounting allows you to sell invoices and get access to cash quickly. This is especially true if your business accounts are online, or in a cloud software, which makes the whole application process seamless. No need to wait on lenders to give you permission to grow your business.

Invoice Financing is More Affordable

Going into a financial institution for a loan can sometimes feel like walking into a grocery store on an empty stomach. Before you know it, you have spent much more than originally intended. With cashflow finance you have the ability to sell your invoices to meet your current needs. There’s no need to take on a larger loan over a longer period of time because the lender simply doesn’t offer a smaller loan.

A substantial business loan could cost you a lot of money in interest over time. Plus, you haven’t even factored in other fees that could apply. Improve cash flow management now with only the amount you need using debtor finance and avoid the complicated fees of traditional loans.

Invoice Financing Allows for Greater Flexibility

Invoice trading obviously offers more flexible payments and lending options but the flexibility of this lending solution doesn’t end there. By selling your receivables to investors and receiving the bulk of the payment then and there, you are freeing yourself up to focus on your business. Once your company is approved by the invoice finance provider, it gets even quicker and easier to sell future invoices, which means you are always in control of when you get paid. Not only do you have the cashflow to grow your business but now you have more time to dedicate yourself to ensuring future success.