Invoice Finance

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Invoice Finance

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Are you losing thousands of dollars in your business because of a lack of business cash flow?

Australian small and medium sized businesses often find themselves faced with wonderful market place opportunities, but miss out because of strict lending criteria of banks or when cash flow is tied up in unpaid invoices. An excellent alternative solution is invoice finance, also known as debtor finance or cash flow finance.

Businesses mostly operate on credit. This means as your sales increase, a lot of your cash may be tied up in your debtors’ books for the coming 60 to 120 days at least. But at the same time, there are expenses that need to be incurred to keep your business going. The lack of cash flow can have a devastating effect on your business operation and this is where you can take advantage of obtaining invoice finance.

With each sale, an invoice is generated by the business. These invoices can be used as guarantee to get instant cash. Good financial institutions can provide up to 90 percent cash against your sales invoices. Invoice financing can be used as a cash flow solution by different types of companies and businesses; from regional to multinational and from newly setup businesses to financial giants. All you need is outstanding invoice payments on your sales ledger and you can qualify for invoice financing.

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Many small business owners will watch out for their ongoing cash flow. All things considered, cash flow is among the most important predictors of success and is a critical part of the business financing. Luckily for companies that are concerned about their cash flow, there is a scope of various business funding tools on offer to help them in reaching a stronger financial position. One of these is invoice factoring – an innovative financial product that can help organizations to manage their cash flow.

Invoice finance works by assigning invoices to another business – basically an outsourced credit department – that at that point accepts accountability for filling the invoice and handling the payment. The invoice gets an up-front payment of the invoice, without having to invest resources into chasing up the debtor, a responsibility that is assumed by the invoice finance provider.

This upfront payment will represent the majority of the invoice’s value, with the remaining amount exchanged once the issue is settled with the debtor. The correct distribution will rely on a number of different factors, although it is possible for companies to receive up to 80 percent of the invoice upfront. Poor cash flow is one of the main reasons for business under performance and failure.For small- and medium-sized businesses, the real key to success is maintaining a strong flow of cash through the business.However, numerous firms struggle when required to make large capital outlays to suppliers who demand fast payment and then wait between 30 and 90 days before receiving payment from customers.

The process of invoice financing can be carried out in two ways; invoice discounting and factoring discounting. Both of these methods generate instant cash for your business once you apply for it. The invoice balance minus the bank charges is paid to your business as soon as the customer settles the amount on the invoice. The main difference between both the methods is that the latter also provides additional benefits like debt collection and management of the sales ledger with additional charges. So the factoring method can be considered as a better option for small businesses that are doing most of their dealings with direct credit.

With this system, you are able to get cash flow to keep your working capital stable and to ensure smooth running of your business activities. So if you need cash and have outstanding sales invoices, then invoice financing is the right option for you.

At Intellichoice, we are often asked about invoice financing and how it can help businesses grow.

In its simplest form, Invoice financing is simply a short term form of borrowing – basically you are borrowing against a percentage of the value of outstanding invoices which means the business gets the money in earlier than it normally would.

We are always looking for the better option to help businesses get ahead, and now, in association with Intellichoice, I can say that I have reached a special point where we have enormous resourses at our fingertips.

Intellichoice’s wide range of funding solutions in International Trade Finance, Debtor Finance, Business & Development Finance means that we can more readily bring the right solutions to our clients’ businesses. Moreover, we wish to be a solid partner in the ongoing financing of your businesses, ensuring that our clients’ businesses continues to reach their ultimate potential.

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With each sale, an invoice is generated by the business

These invoices can be used as guarantee to get instant cash. Good financial institutions can provide up to 90 percent cash against your sales invoices. Invoice financing can be used as a cash flow solution by different types of companies and businesses…

The process of invoice financing can be carried out in two ways

Both of these methods generate instant cash for your business once you apply for it. The invoice balance minus the bank charges is paid to your business as soon as the customer settles the amount on the invoice. The main difference between both the methods…

Frequently asked questions

How does invoice financing work

Invoice financing is fairly straightforward. Once an invoice is generated, you forward it to an external invoice funding business that will generally process it within 24 hours. They will then transfer the invoice amount to you from their own funds, minus a percentage as payment.

How much does it cost?

Most invoice funding companies will pay you between 80-95% of the total value of your invoices on the same day they are issued. An advance fee will also be charged, usually between 2-5% of the invoice amount. The exact costs involved will depend on your business, however, numerous invoice funding providers also charge set transaction, exchange and discount fees.

Can any business use invoice financing?

From multi-billion dollar companies to sole traders and freelancers, there are invoice financing firms built to help a range of clients.

Is Invoice Finance for me?

Intellichoice provides invoice finance to small and medium-sized businesses turning over between $200K and $10 million per annum.

What are the benefits of invoice financing?

Among the other benefits on offer from invoice finance are:

a) More assets to invest in your business. Once you remove the administrative burden of chasing payments, companies can put those assets into expanding their operations.

b) Easier to take on new business. When companies know they aren’t at risk of late or missing payments, it turns out to be considerably simpler to acknowledge the new business contract

c) Enhanced cash flow. Prompt payment through invoice financing can put your business in a much considerably financial position.
d) Financing to scale with your business. Alternative financing techniques like a business overdraft frequently won’t change over time, making them unreliable for quick developing organisations. On the other hand, invoice finance will adjust to match the growth in your sales.

e) Fast approvals. Invoice financing agreements can usually be reached faster than alternative financing methods.

What industries can take advantage of invoice financing?

Any industry where companies are compelled to wait while invoices may be finished by a client could benefit from pursuing an invoice financing solution. Some of the most well-known include:

a) Professional services like recruitment
b) Cleaning, maintenance, and landscaping companies
c) The construction sector and trades
d) Manufacturing
e) Transport and distribution
f) Wholesalers
g) Importers

These are only a few of the sectors that might be able to use invoice financing. The adaptability of this service means it can be applied to a wide range of various sectors, depending upon the specific payment conditions.

How fast can I get approval?

A response is provided within 24 to 48 hours of receiving your application.

How do I know if I qualify?

If you operate a business which provides credit to your customers (i.e. you deliver a product or service to your clients and issue an invoice for payment), then you’re a good fit for invoice finance.

About Us

At Intellichoice Finance, we’ve been successfully providing finance solutions to satisfied clients for years. From home loans, bad credit loans… to owner builder loans… equipment and commercial finance – we’ve got it covered.