Benefits of invoice financing

The main benefit of invoice financing to any business in Australia is that it provides a quick, timely and significant increase to a company's cashflow. This is important to businesses who are short of working capital.

Other benefits of invoice finance or debtor finance include the following:

• Invoice financing lets you outsource the sales ledger, thus freeing up resources

• Money is available from your sales ledger as soon as it is invoiced using invoice financing

• Money is available for your business, such as funding advance orders, capital investment or to pay overheads such as wages

• Non-recourse factoring offers protection from bad debts

• The invoice financing provider can provide valuable information about the credit rating of your customers

• The financier offering debtor finance can sometimes assist in negotiating better terms with your suppliers

• Invoice financing provides a smoother cashflow and allows for improved financial planning

• On an approved debtor finance facility, within 24 hours of supplying invoices you can receive up to 80% of the invoice value, balance paid upon receipt from client or goods and services

• The borrowing capability of an invoice financing facility can grow with your business

• Personal assets need not be tied to the invoice finance facility

• Debtor finance is a specialist lending product so we understand your needs

• Invoice finance lets you release the funds to grow your business

• Invoice finance takes out the seasonal humps in business

Some of the pitfalls of debtor finance or invoice financing may include the following:

• Depending upon how well the business is run, a downside of invoice financing can be that there is an extra process in the administration of the cashflow

• There may be an additional cost payable to the factoring company

• Some customers may be put off by invoice factoring

• There can be a long tie in period with some invoice factoring agencies

• Factoring companies may impose conditions on your customers and how you do business with them

• You lose the direct link with customers over chasing debts which may sour relationships if the factoring company is too aggressive

• The potential for other borrowing may be reduced as the value of your book debt cannot be used as security

If you would like more information about invoice financing and how it can benefit your business, speak to one of the mortgage brokers at Intellichoice today on 1300 55 10 45. Other business cashflow solutions are also available, including inventory finance, trade finance and equipment rental finance.