Small and medium sized enterprises (SME) that experience seasonal cash flow fluctuations are likely to also struggle with irregular revenue as a result. Unfortunately, no matter how profitable your business, unpredictable cash flow can make planning for long term success difficult.

Invoice Finance is a practical, customisable and effective financial solution for managing cash flow volatility. This flexible funding option gives you the ability to predict and control access to working capital, even during seasonal changes in demand and sales.

Explore how ScotPac’s Invoice Finance works here.

What types of businesses benefit most from Invoice Finance?

Different businesses may experience variable income and irregular revenue for different reasons.

Labour Hire and Recruitment 

Labour hire and recruitment businesses often experience strong seasonality tied to project cycles, economic conditions, and peak hiring periods, creating fluctuating cash flow as payroll needs rise ahead of client payments.

Wholesalers 

Sellers of wholesale products work with distributors with long customer payment terms that can make inflow of cash peak and trough significantly.

Tourism and Hospitality 

Both of these sectors experience defined and distinctive peak seasons in demand.

How does Invoice Finance help with cash flow volatility?

Invoice Finance is a highly effective finance solution for businesses with variable or cyclical sales patterns. It provides access to much needed working capital during the quiet months when balancing income with expenses is more of a challenge.

How does it work? 

With Invoice Finance, an SME can submit an invoice or invoices for advance funding. This means if your customers have yet to pay the invoices you’ve issued them, ScotPac will provide funding of up to 85% of the value of the submitted invoices.

• Unlock access to cash owed to you
• Avoid waiting the 30, 60 or 90 day payment period
• Reduce cash flow volatility

Once your customers pay their invoices, you then receive the balance of the funds less any relevant fees.

In other words, Invoice Finance works to level out irregular revenue during seasonal changes to cash flow.

What are the benefits? 

Control your cash flow

By smoothing out your income in slower seasons, you can ensure better cash flow management.

Reduce reliance on loans

Invoice Finance assists seasonal revenue businesses in avoiding reliance on short-term loans or overdraft facilities.

Meet operational expenditure

Whilst your income may be variable, your business expenditure is not. Invoice Finance helps support you in making supplier payments, meeting payroll and investing in marketing spend throughout the year.

Maintain inventory and stock

With control over your access to working capital, your business can ensure its inventory is stocked, its supplier prices are locked in when they are favourable, and you are able to take advantage of bulk and early-bird discounts.

Invest in growth

Invoice Finance allows businesses to take advantage of opportunities to expand and grow. Whether this is investing in marketing and advertising or capitalising on gaps presented in the market, with access to working capital your business can fund its long-term success sustainably.

Scalable with your business

By leveraging the value of your unpaid invoices, this finance facility can scale along with your business. The more invoices of higher value you submit, the more funding you can access.

Which is better: Invoice Finance vs overdrafts vs business loans?

Invoice Finance is not the only solution for seasonal revenue businesses concerned about their cash flow consistency.

Other traditional credit products can offer alternatives worth considering, such as:

• Overdraft facilities
• Short-term business loans

Should you use an overdraft facility? 

Traditional overdraft facilities have their place and utility, however if your seasonal sales cycle encounters consistent cash flow volatility the benefits can be limited.

• The overdraft is connected to your existing business account
• The fixed amount can be prohibitive
• Overdraft facilities are more difficult to scale
• There is increased debt risk

Should you use business loans? 

Short-term business loans provide a once-off injection of working capital. This loan is subject to interest costs and is not tied to your actual season sales.

• Loans are useful for specific investment, growth or expenditure needs
• Eligibility criteria can be stricter
• More useful for short-term solutions
• There is increased debt risk

In general, Invoice Finance offers more control over the amount of working capital you can access; more adaptability in how your facility can grow with your business; and less risk for long-term use in and out of seasonal fluctuations in income.

Want to reduce Cash Flow Volatility? Speak to ScotPac today.

Why work with ScotPac?

• We are the largest non-banking lender in Australia
• Our team draws on over 35 years of experience
• We currently support more than 9,300 businesses
• We provide $26.3 billion in invoice funding annually

But most importantly, we will work with you to understand your seasonal sales cycles and variable income needs to customise the right Invoice Finance facility to grow.

Find out more about how our Invoice Finance can fuel your business’s success today.