Supply chain disruption can cause significant cash flow issues for Australian businesses, especially those involved in domestic or international trade.
From freight delays to spikes in material cost, it is critical for small and medium sized enterprises (SME) to ensure adequate access to the working capital needed. Invoice Finance unlocks the cash tied up in unpaid invoices and allows advance access to working capital owed to your business without waiting the 30, 60, or 90 day payment term for customers to settle.
To find out more about our Invoice Finance offering, visit our webpage today.
How Does Invoice Finance Protect Cash Flow When Supply Chains Are Disrupted?
Global shipping delays, container shortages, and volatile freight surcharges are no longer as rare as they once were.
For importers, wholesalers, and manufacturers, this can present a difficult dilemma: Freight costs and supplier payments may be due now, but payment from issued customer invoices is yet to come in.
The resulting gap in cash flow does not enable enough flexibility.
- Freight, logistics, and warehousing costs are required upfront
- Surcharges can be difficult to predict and plan for
- Supplier terms can tighten under pressure
Invoice Finance solves this problem by turning unpaid invoices into immediate cash. That access to working capital can help absorb the higher freight or material cost, smooth over stalling operations or invest in alternate supply when shipping is delayed.
Invoice Finance protects cash flow by allowing businesses to not need to rely on standard trading terms. Instead, they can draw down cash against issued invoices before they are paid.
Invoice Finance is also designed to grow with your business. Because funding is linked to your invoice volume, the facility can adapt as your sales change, without a separate loan application each time.
Can You Unlock Cash From Unpaid Invoices to Cover Rising Freight and Import Costs?
Invoice Finance can unlock the working capital needed to cover rising freight and import costs.
How does it work?
- Your business issues an invoice to a customer for goods shipped or delivered.
- Submit the invoice to ScotPac for approval
- Access up to 85% of that invoice value in advance, generally within 24 hours
- Use the funds to cover freight costs, customs duties, or supplier payments
- Receive the remaining balance once payment for the invoice is received
How can Sea Freight Importers Use Invoice Finance to Cover Container and Demurrage Fees?
Importers who bring in goods by sea can face demurrage and detention fees when port congestion delays container pickup. (Demurrage refers to the fee charged when shipping containers are kept at a port or terminal beyond the agreed-to time.)
Invoice Finance allows businesses to draw cash against invoices from prior shipments to settle port fees immediately and prevent compounding penalty charges over time.
How can Wholesale Distributors Bridge the Gap Between Supplier Deposits and Customer Payment Terms?
Distributors are frequently financially pressed between suppliers who demand deposits upfront and retail customers who need 30 to 90-day payment terms.
With an Invoice Finance facility, you can close this gap by turning the already-issued customer invoices into accessible cash immediately. That way deposits and freight bills don’t have to wait until the end of your sales cycle.
How can Manufacturers Manage Input Cost Volatility From Overseas Raw Material Shipments?
Manufacturers that rely on components or materials from overseas can be heavily impacted by input costs shifting mid-order. This can be due to freight surcharges or even currency movements. Invoice Finance ensures there is an additional funding line that will adjust based on the sales volume. In turn this helps businesses smooth out the cost fluctuations without renegotiating a loan each time.
How Fast Can You Access Funds Through Invoice Finance?
Invoice Finance’s advantage is the speed and ease with which SMEs can access the working capital they need, when they need. Once approved and the facility is set up, your business can access cash in advance in as little as 24 hours.
Step 1 – Facility setup
Our online application for Invoice Finance is fast and simple. Once completed, our lending specialists will assess and approve the facilities significantly faster than traditional bank loans take. The primary security for the facility is your sales ledger rather than property or other fixed assets.
Step 2 – Finance invoices
Once your Invoice Finance solution is active, access funds against new invoices within as little as 24 hours of the invoice being raised and verified. This gives control over your sales cycle and your cash flow.
Step 3 – Ongoing scaling
Because the facility is tied to your trading activity, that is the value of your invoices, available funding moves with your revenue. Speak to your ScotPac lending specialist about how your limit is reviewed as your business grows.
ScotPac’s Trade Finance facility is always operated in conjunction with an Invoice Finance facility, which gives you end-to-end supply chain funding coverage.
Explore how ScotPac’s Invoice Finance can help your business turn unpaid invoices into working capital during periods of supply chain disruption.
Avoid Supply Chain Disruption with Invoice Finance
Is your business at risk of supply chain disruption? Do you need to access tomorrow’s payments today?
Begin your Invoice Finance application today or speak to our team to find out more.
