What are the top 5 myths about Invoice Finance?
Invoice Finance is a customisable form of finance that allows small and medium enterprises (SMEs) to access in advance the money owed to them from their clients and customers.
This flexible finance solution can be critical for helping SMEs who struggle with cash flow due to late invoice payments. Access to reliable working capital when you need it can be the fuel needed for your business’s success to help maintain the financial stability you need to grow.
However, there are a number of Invoice Finance myths that without being dispelled can result in your business missing out on some unique opportunities.
To help you avoid misinformation and truly determine if Invoice Finance is a good idea for your business, here are the top 5 myths many SMEs mistakenly believe.
1. Is Invoice Finance Only for Struggling Businesses?
The Myth
Some business owners approach Invoice Finance like a financial band-aid, just trying to plaster over cash flow issues. This misconception believes that using Invoice Finance signals a financial weakness of the business or may communicate a level of instability that can affect their suppliers’ or customers’ perception of it.
The Reality
In reality, Invoice Finance is much more of a strategic growth tool to help accelerate business expansion. A customised business finance solution can help businesses take on new investments or contracts, or smooth out cash flow due to seasonal fluctuations. Many healthy and thriving businesses use Invoice Finance to manage rapid growth without being at the mercy of their outstanding accounts.
2. Is Invoice Finance too expensive?
Some SMEs in Australia decline exploring the potential of Invoice Finance because they believe that the associated costs are significantly higher than other forms of business finance solutions. Unfortunately, this can lead to some real missed opportunities.
The Reality
Whether or not Invoice Finance is a good idea for your business will depend on a number of factors, but with ScotPac one thing you can rely on is that costs of this financial facility are transparent and, when recommended by our team, offset by its benefits.
In many cases, the upfront fees associated with Invoice Finance are lower than those of unsecured loans or overdraft facilities. The access to immediate funds to ensure your growing operations can be maintained sustainably can more often than not make the cost of Invoice Finance worth it.
3. Is Invoice Finance just another type of debt?
The Myth
One of the other more pervasive Invoice Finance myths is that it is the same form of debt as taking out a business loan. For businesses who are seeking to avoid liabilities and debt, this can unfortunately cause them to unwisely avoid exploring Invoice Finance.
The Reality
Invoice Finance, by its nature, simply unlocks the revenue your business has already earned. It is an advance on the money owed to you by your customers or clients, not a loan that requires you to pay it back over a specific term. Rather than creating new debt for your business, it transforms your accounts receivable into immediately accessible working capital and can effectively maintain a healthy balance sheet for your SME.
4. Is Invoice Finance only available to big businesses?
The Myth
Some SMEs believe that Invoice Finance is either only available to big companies or that only large corporations would benefit from this financial facility. The result is that many smaller businesses who could be considering whether Invoice Finance is a good option for them are missing out.
The Reality
The reality in Australia is that many SMEs can and do utilise Invoice Finance. This customisable solution can be tailored for businesses of all sizes. As long as your business operates business-to-business (i.e., not to consumers) and meets the minimum criteria, even sole traders can access this effective financial solution.
5. Is Invoice Finance too complicated and too relationship damaging?
The Myth
Unfortunately, some business owners feel that Invoice Finance is just too complicated a facility to consider using. Alternatively, some SMEs might be worried that use of Invoice Finance can damage their reputation or relationship with their clients and customers. Both of these are unfortunate but relatable myths.
The Reality
At ScotPac, we have been providing SMEs with Invoice Finance solutions for over 35 years and currently support over 9,300 businesses and fund $26.3 billion worth of invoices annually. That’s why our team is confident that we can find a hassle-free, simple and seamless Invoice Finance solution for your business. Leveraging the latest in tech-enabled finance solutions, an Invoice Finance facility with ScotPac will ensure minimal disruption and effort on your part.
We also offer discreet forms of Invoice Finance where your customers or clients will be none-the-wiser for your use of the financial solution. Our Invoice Finance solutions are customisable to suit your business needs and your personal preferences.
Is Invoice Finance a good idea for your business?
Whilst we have covered the top Invoice Finance myths that are believed across the country, the question as to whether Invoice Finance is right for your business remains.
Of course, Invoice Finance can be an invaluable way to unlock your tied up funds, empowering you to take advantage of market opportunities to grow, cover unexpected expenditure, or simply manage cash flow for seamless operations. Invoice Finance is all about enabling growth and access to working capital without debt, exorbitant fees, or complicated paperwork.
Whether you are a small, medium or large enterprise; whether you are struggling to fund ongoing operations or ready to expand to the next level; and whether you want a tailored solution with the requisite discretion or not, the team here at ScotPac are experts in helping businesses succeed.
To discuss any of the Invoice Finance myths above, have any other questions answered, or find out more about whether your business is eligible and ideal for this form of business finance, contact your local ScotPac office today.