Access funds fast once you’re set-up
For invoice financing, it’s simply 1, 2, 3!
- STEP 1: You send us copies of the invoices you would like to turn into cash
- STEP 2: On approval, you’ll receive 80% of the value of your invoices into your bank account within 24 hours
- STEP 3: You’ll receive the remaining 20%, less a small fee when your customers pay
Frequently Asked Questions
Understanding working capital financing
Invoice financing improves your cash flow by giving you access to up to 80% of the value of your invoices within 24 hours. It is a line of credit secured against outstanding invoices that expands automatically as your business grows and reduces as your customers pay their invoices.
Late payments can cause strain on businesses by limiting cash flow. Rather than taking on additional debt, you can receive an advance on money owing to you, empowering you to take advantage of early payment discounts, pay wages and suppliers on time, fulfil orders and get on top of your operating expenses, as well as fund growth opportunities if you want to expand your business.
One of the really attractive features about invoice factoring is that it can grow right along with the size of your company, because there are no real monetary restrictions. The amount of money paid to you by a factoring company is strictly based on the value of the accounts receivable, so if your business grows significantly, the factoring amount you receive can grow right along with it.
Invoice financing is also known as factoring, invoice discounting, working capital finance, cash flow finance and accounts receivables finance.
Trade finance makes import and export transactions possible for entities, ranging from a small business importing its first private-label product from overseas, to multi-national corporations importing or exporting large amounts of inventory around the globe each year.
Smaller businesses often have very limited access to loans and other forms of interim financing to cover the cost of goods they plan to buy or sell. Even with a confirmed order for products, many banks won't provide loans or overdraft protection for these types of transactions.
Business owners, both small and large, don't want to have their own money tied up in shipments of goods that could, for example, take four to six weeks or more to arrive from an overseas manufacturer.
On the flip side, companies that export large amounts of goods can't necessarily afford to wait until their export products have arrived at some distant destination weeks later, before receiving payment. Some sources estimate that over 90 per cent of global trade depends on trade financing, which helps goods keep moving even when companies don't have enough cash flow internally to finance the transactions themselves.
Trade finance covers different types of activities such as issuing letters of credit, lending, forfaiting, export credit and financing, and factoring. The trade financing process involves several different parties, including the buyer and seller, the trade financier, export credit agencies, and insurers.
Supply chain finance is a short-term commercial finance option that gives you funds to pay suppliers upfront so your business doesn’t have to deplete cash reserves.
Here is a representative scenario:
A business has an orderbook ready to fulfil, but not the funds to pay its suppliers upfront; nor is the bank willing to extend the amount of credit that would be required. Using supply chain financing, the suppliers are paid directly usually via a letter of credit and or bank transfers. The business fulfils the order; with proceeds arriving after shipment is received.
Large and unexpected customer requests or orders can leave businesses with a great opportunity but also can cause issues trying to fulfil the large orders. Supply chain financing can relieve some of that strain and allow you to accept larger orders while still servicing your regular customers and maintaining your standard operations. Common examples of what the funds can be used for include:
- Acquiring additional equipment
- Hiring additional workforce staff
- Purchasing supplies and raw materials
A term loan is the most straightforward type of small business loan: You borrow a certain amount of money from a lender and you agree to pay back the loan plus interest over a set period of time, with the principal fully amortizing over that term. Payments are typically made monthly.
There are no frills like drawdowns, revolvers, variable payments, etc. Just money now, with set payback terms.
Most small business term loans come in short- (less than 1 year), medium- (1 to 5 years), and long-term (more than 5 years) varieties. As a general rule, the shorter the term, the easier the loan is to get and the higher the interest rate.
- As your business grows, the working capital financing can grow with it, which means you can use your own debtors to enhance your cash flow position sooner.
- Fast access to cash isn’t the only benefit. We send all statements and manage the collection of outstanding invoices, saving you time and the hassle of chasing payments.
- More benefits
- Unlike overdrafts, you do not need to provide real estate as security
- No additional debt is taken on
- It’s a standalone solution that is independent of other business borrowings
- You will no longer need to wait 30 or 60 days to be paid for outstanding invoices
- You can grow your business faster with improved cash flow
- Gain a competitive advantage by paying cash upfront when dealing with your suppliers
Invoice financing has the advantage over applying for a conventional bank loan because the invoices themselves serve as collateral to a working capital company, and that makes the approval process much simpler than a bank loan would be.
Instead of having good credit history and a lengthy business track record, the most important factor in invoice factoring is that the customers being invoiced must have fairly good credit history, and make their payments on time. Many small businesses who wouldn’t qualify for bank loans are able to get approved for invoice financing and can enjoy the use of immediate funding; rather than waiting for the approval of a bank loan to come through.
Getting cash flow help
- Registered Australian businesses with an ABN
- Ideal for small to medium businesses with annual turnover between $200,000 and $20 million, that provide goods or services on credit terms greater than seven days
- Needing funds for invoices (single or multiple) greater than $100,000
- New or established businesses who may be in growth phase or your creditors may be stretched. You may have limited resources for managing accounts receivable and don’t have the type of security that a bank would need. Or you may simply be looking for a smarter way to manage cash flow.
- Businesses undertaking domestic and/or international trade
- We supply funds between $100,000 and $1 million. If you need a larger amount, please contact us to discuss your needs.
Yes, there is a minimum need of funding to be greater than $100,000.
Firstly, complete your details in the enquiry form and we will be in touch to assess your needs, or simply give us a call on 1300 216 230. Following that it’s a simple process:
- Step 1: Tell us about your business’ cash flow needs
As our working capital solutions are customised to suit your business needs, we need to understand your business and its requirements.
- Step 2: We help you with the right solution for your needs
This will be transparent and includes a prepayment percentage against your fundable invoices, plus a funding limit and any charges that will be made, so you fully understand our proposal.
- Step 3: Get credit approval
Our expert team will arrange a credit application in order for us to present a formal credit-backed offer to you.
- Step 4: Documentation is completed
We require legal documentation to be completed prior to funding, which will include a sales finance agreement and a debenture.
- Step 5: Access your funding
Following set up of your facility, we will make funding available to you after satisfactory settlement of any existing invoice finance agreements you may have.
- Invoice financing is a low cost alternative to some traditional banking options. There are application and administration fees plus interest.
The application fee will be directly related to your account and how simple or complex your needs are. The easier your account is to set up, the lower the fee. It’s a one off fee.
- Administration fees range from one to five per cent of the value of invoices submitted depending on your risk profile and the level of service you require.
- Interest is only charged on the amount borrowed and is comparable to bank overdraft rates. Because interest is calculated daily, you only pay interest on the balance of your outstanding invoices, so as invoices are paid, your interest cost reduces.
- For invoice financing, the accounts receivable invoices are used as the collateral.
- NEEDS MORE INFO
Why Working Capital Solutions
SMEs and businesses work with us because we offer:
- Tailor-made financing that has the flexibility to grow with your business
- Immediate access to up to 80% of your sales ledger/invoices
- Reduced administration, enabled by market leading technology
- 24/7 online access and availability of management information
- A highly experienced team who understand the particular needs of businesses seeking invoice finance
Yes, we have over 50 years experience working with small and medium businesses helping with their finance and accounting needs. Find out more about us or get in touch today.