Small business owners in Australia often face cash flow management issues as a result of clients’ slow payment on invoices or generous payment terms.
Without access to the working capital, small businesses can find it difficult to maintain operations, meet expenditure needs and grasp growth opportunities in the market.
Invoice Finance, a business finance solution provided by ScotPac, ensures immediate access to cash by advancing up to 85% of unpaid invoice values.
For small businesses this means eliminating the need to chase cash and a sustainable finance facility to turn receivables into working capital fast.
Learn more about ScotPac’s Invoice Finance.
What Is Small Business Invoice Finance in Australia?
Invoice Finance unlocks the money owed to your business in the form of outstanding invoices you’ve issued to your clients.
If you are a business-to-business operator, you can access an advance on the money owed to you (up to 85%) within just 24 hours by using the value of those invoices as security. Once your clients have settled their accounts, you receive the final 15% less any applicable fees.
- There is no need to put up property as security.
- There are no fixed payments.
- There is no taking on debt.
All you need to be eligible is at least an average of $10,000 in monthly turnover and creditworthy debtors.
How Does ScotPac Invoice Finance Work for Slow Client Payments?
For many SMEs in Australia, the delay in receiving the money owed to them is not due to unworthy customers or clients, but either overly generous payment terms (anywhere from 30 to 90 days!) or just slow paying clients in general.
With ScotPac, our completely online application portal allows you to access most of the money due to you within just 24 hours from approval.
Plus, there are self-managed or full-service options to fit your small business’s needs. How does it work?
- Invoice your customers
- Submit your invoices for funding.
- Receive funds within 24 hours.
- Customers settle their payment by the end of their payment terms.
- ScotPac provides the outstanding amount less any fees.
When you partner with ScotPac, you can rest assured that all fees are transparent and based on invoice term/debtor risk rather than just your business’s credit score.
Should You Choose Invoice Finance Over a Traditional Business Loan?
Invoice Finance offers greater flexibility without the debt and helps SME owners avoid overdrafts, drawing on personal savings or highly costly credit cards. But how does it compare to traditional business loans?
Security
Invoice Finance utilises the unpaid invoices as security.
A traditional Business Loan may require an asset as collateral.
Approval Speed
Invoice Finance can be approved within one business day.
Traditional loans can sometimes take weeks for application and approval.
Funding Limit
With Invoice Finance, your limit is scalable with your monthly turnover.
For Business Loans it is often fixed and asset based.
Cost
Invoice Finance only incurs usage-based fees.
Whereas a Business Loan incurs ongoing interest.
Why choose Invoice Finance?
If your small business is facing cash flow shortages due to slow paying clients, Invoice Finance gives you the advance access you need to:
- Pay suppliers early and order in bulk for discounts.
- Bid on bigger contracts with confidence.
- Bridge seasonal gaps in cash flow.
- Take advantage of time-sensitive growth opportunities.
What is the difference between Invoice Factoring and Invoice Discounting?
Invoice Factoring and Discounting both provide access to otherwise inaccessible working capital locked in the unpaid invoices you’ve issued to clients.
So, what is the difference?
Invoice Factoring involves the selling of invoices to a financier, like ScotPac, who is then responsible for collecting payment directly from clients. This helps you by:
- Offloading the responsibility of debt collection
- Save on the cost of maintaining accounts receivable staff
But the trade-off is:
- You sacrifice confidentiality.
Invoice Discounting also advances funds against unpaid invoices, but your business retains collection duties. The benefits of this approach are:
- Often lower facility fees.
- Easier to maintain confidentiality of your facility use.
But the trade-off is:
- You remain responsible for the debt collection.
Why partner with ScotPac?
For over 35 years, the lending specialists at ScotPac have been helping SMEs across Australia and in various industries fuel their growth with tailored business finance solutions.
In fact, ScotPac is actually the largest non-banking lender in the country:
- We currently support over 9,300 businesses
- We fund $26.3 billion invoices each year
Ready to find out more about how Invoice Finance can help your small business manage slow paying clients? Apply for ScotPac Invoice Finance today.
