Invoice financing can be a very effective way for companies to access needed working capital by making the most of their outstanding invoices. 

However, for many businesses it can be tempting to just stick with the invoice financing provider you initially chose despite changes in the market and the value of that facility. Changing invoice finance providers can seem like more hassle than it’s worth but there are actually some very good reasons for considering a change. 

To help you out, we’ve put together a list of the main factors to consider to ensure your invoice finance arrangement is putting your business ahead rather than behind. 

Invoice finance: An overview

Invoice financing is an effective way of raising and accessing capital without having to apply for a business loan or use an overdraft facility.

As a business, you may have a significant amount of outstanding invoices. Instead of having to wait for the due date for payment to pass to receive your money, invoice finance allows you to access up to 95% of the outstanding amount through a cash advance. Your invoice financing provider will provide you with the agreed to value of your invoices within 24 hours of billing the customer.

This allows you to quickly utilise the capital owed to you to help your business operate and grow as required. 

Your invoice financing provider will provide you with terms and an arrangement after which they will provide you with the funds ahead of your invoices actually being settled by your customers/clients. 

Reasons why you may want to switch invoice financing providers

1. Reduce your costs

Whether your initial finance facility was set up at a higher price than the current market or your business is no longer considered as risky as it was before, you may be paying too much for your invoice finance. 

Additional fees and interest rate offerings differ from provider to provider. So, make sure to do your own research to find a provider that helps you make the most of your invoice finance and ensures you greatest access to working capital. 

2. No longer benefitting from the facility

There are many pros to using invoice financing for your business. As part of your regular and routine financial check-ups, we recommend going through the following advantages of invoice finance to ensure you’re getting the most benefit from your current arrangement. 

If you aren’t, it may be time to consider other providers.

  • Is your current facility improving your day-to-day cash flow?
  • Are you benefitting from extended payment terms?
  • How accessible is your current facility? 
  • How fast is your access to funding?
  • Is your facility able to grow in line with your business?
  • Are you required to provide property security?
  • How effective is your collection and account management?

3. Avoid bad service

Even capital solutions providers need to offer high quality customer service. If your previous provider is offering you poor service it may indicate a lack of priority or care.

Consider moving to a company that invests in and maintains an active customer service. That way you can rest assured that you and your business are in safe, expert and caring hands. 

4. Greater cash generation

If your current invoice finance facility is not meeting your needs, you may not be realising your business’s full potential for cash generation. From inadequate prepayment limits to concentration restrictions, there’s a lot to consider in relation to your financial arrangement.

By speaking with alternate providers, you may be able to better maximise your working capital and cash generation. 

5. Changes to your business

Businesses change and adapt to growth and changing market conditions. If you require additional borrowing or financing facilities, your current provider may not be able to service you properly. 

This is the opportune moment to reevaluate your provider and start considering other invoice financing companies who can better service your needs and your business. 

 6. Changes to the lender’s business

By the same token, if your lender or provider’s business changes they may not be able to continually support your business in the way that you require. 

Whether or not you’ve been issued a formal termination notice, if your provider no longer is able to support your financial needs make sure you begin engaging the services of an alternate partner for funding as soon as possible. 

7. Invoice finance facility breaches

Managing away is a term that refers to a lender declining to continue offering a financial facility due to you breaching a previous arrangement. In such cases, you may need to look for alternate providers. In such instances, you may be required to repay any outstanding amounts or engage the services of a provider who will pay the amount on your behalf in addition to offering you a new invoice finance facility. 

Why ScotPac is the next call you need to make

For over 30 years, ScotPac’s invoice finance facilities have been enabling businesses to grow and succeed. Our selective, flexible funding options allow businesses to access the capital they need when they need it. 

  • There’s no need for putting up your personal home as security. 
  • There’s no need to wait longer than 24 hours to access the capital owed to you.
  • There’s no need to choose between submitting one invoice or another with multiple invoices being submittable for funding.

The experts here at ScotPac are dedicated to helping you find flexible finance solutions that suit your needs. Find out more about invoice financing facilities for you by calling us on 1300 177 485.