If your Adelaide business needs fast funding, Invoice Finance could provide an immediate cash injection without tying you down to long-term debt.
It enables you to release the funds in your unpaid invoices instead of waiting months for payment. You can complete a customer order, submit the invoice for funding, and get up to 95% of the invoice value within 24 hours.
Keep reading to find out how Invoice Finance works, how much it costs, and whether it’s the right funding solution for your business.
What Is Invoice Finance in Adelaide?
Invoice Finance is a funding solution that allows businesses to leverage one of their most significant assets – outstanding invoices.
Over half of Australian businesses are owed more than $20,000 from their customers at any one time.
Invoice Finance, also known as debtor finance, helps you access the money owed to your business. It closes the gap between raising an invoice and receiving payment from your customer, so you can cover overheads, pay suppliers, and invest in growth.
You can access up to 95% of the invoice value as a cash advance when you raise an invoice. The remaining balance is transferred to your account when your customer pays, less the facility fees.
The approval process is much faster than other types of financing, and you can choose from confidential invoice discounting or full-service invoice factoring. There’s also no need for property security.
Want to learn more about this type of funding? Read our Invoice Finance guide.
How Does Invoicing Financing Work?
You can use Invoice Finance to keep money flowing through your business and avoid cash flow gaps. Let’s take a look at how Invoice Finance works in five simple steps:
Fulfil an Order and Raise an Invoice
You complete a job and raise an invoice as usual on your agreed payment terms.
Submit the Invoice for Funding
You submit the invoice to the finance company for funding. Depending on the type of facility, you can choose to submit a single invoice, multiple invoices, or your entire accounts receivable.
Receive up to 95% Of the Invoice Value Upfront
The lender provides a cash advance of up to 95% of the invoice value. Unlike a traditional bank loan, there are no restrictions on how you choose to use the funds.
Depending on the type of facility, your customer pays you or the finance company directly when the invoice is due.
Receive the Remaining Balance
Once your customer has paid, the remaining balance of the invoice, less fees, is released.
Key Features of Invoice Finance
You can arrange a funding facility within a couple of days and get up to 95% of the invoice value within 24 hours of submitting it for financing.
Reduce Financial Stress
Over one-third of business owners experience stress due to cash flow gaps caused by extended payment terms. With Invoice Finance, working capital increases with sales volume, so you always have the liquidity you need to meet payroll and other commitments.
Speed up Growth
Access capital to pay suppliers and replenish inventory so you can take on new orders and keep your business growing.
Free up Time
With an invoice factoring facility, collections and account management is outsourced to a team of Invoice Finance Adelaide experts. You can dedicate your time and effort to closing deals and fulfilling orders, not chasing payments from customers.
Funding That Grows With Your Business
Instead of loading long-term debt onto your business, Invoice Finance is a flexible line of credit that increases with your cash flow needs. There are no monthly repayments, and your credit limit increases as you grow and take on more customers.
Invoice Finance Costs
The cost of Invoice Finance in Adelaide can vary depending on the terms of the facility, your unique business circumstances, and the creditworthiness of your customers.
The two main costs are the discount fee and service fee.
The discount fee is the interest charged for the time that the invoice is outstanding.
The service fee is a flat fee between 0.5-1.5% of the total value of the invoice.
You can learn more about the fees involved in our guide, The Cost of Invoice Financing Explained.
Invoice Finance Example
To help you understand how Invoice Finance works, let’s look at a typical Invoice Finance facility.
A transport company in Adelaide has just won a new contract. But with clients taking two months to pay their invoices, the business owner knows they need funding to pay for materials and staff to complete the new job.
They decide to finance an invoice worth $20,000 to cover the costs of the new contract.
The finance company provides an advance of 85% of the invoice value, so the transport company can access $17,000 upfront.
The costs of the facility include a 1% service fee of $200 and an 8% per annum discount rate.
The customer pays the invoice after 60 days, so the total cost of the discount rate is $263.01.
In total, the cost of financing the invoice is $463.01 ($200 + $263.01).
When the finance company receives payment, it deducts the $463.01 from the $3,000 balance and releases the remaining $2,536.99.
The transport company used a single outstanding invoice to fund a new contract and grow the business.
Is Invoice Finance the Right Solution for Your Adelaide Business?
Invoice Finance can be a cost-effective way to avoid cash flow gaps and keep your business moving. It’s a flexible funding option for recruitment, manufacturing, and any business that sells to other businesses on credit terms.
You can choose from a flexible short-term facility with no lock-in or a comprehensive factoring facility where we take care of account management and collections so you can focus on running your business.
If you want to find out more about Invoice Finance and the funding options available, get in touch using our simple online enquiry form or give us a call on the phone number below. Our team of Adelaide-based lending specialists are ready to help!