For small- to medium-sized businesses in particular, bringing on a B2B funder is often one of the best ways to help navigate the admittedly rough and unpredictable waters of the entrepreneurial life. Customers who can never seem to pay on time have devastating consequences to even the strongest businesses, to say nothing of the seasonal fluctuations that cause natural ebbs and flows in terms of incoming cash. According to one study, roughly 90% of companies do not have a proper view into their cash flow and an additional 1 in 3 are dealing with invoices that are at least 90 days past due.
Taking the step to bring on a B2B funder, however, is not a decision that should be made lightly. As is the case with all decisions when the stakes are this high, it requires you to keep a few key things in mind.
The Amount of Funding
Perhaps the most important thing to know before you begin the process of bringing on a B2B funder is exactly how much money you’re going to need in the first place. You should always take steps to properly assess how much your invoices are worth, which will put you in a better position to find the invoice financing service that can best cater to your own unique needs.
Transparency Is King
B2B funders are in the business to make money, the same as you are — this doesn’t mean you should let yourself get taken advantage of, however. You need to work hard to find an invoice financing service that offers terms that are suitable for your needs. Think long and hard about contract terms, any hidden fees, and the overall level of transparency that they can guarantee.
Be on the lookout for hidden fees. If a company offers a low contract rate, it may be a sign that you’ll be dealing with hidden fees you won’t find out about until you’re locked in. Above all else, do not get locked into a long-term contract if it doesn’t make sense for what you’re trying to accomplish.
The Advance Rate
One of the most mission-critical things to remember is that many invoice-financing companies usually offer an advance rate of roughly 70 to 90%. The rest of the money is paid once the debtor makes their payment. Based on this one simple idea, you should use it as a guide to decide exactly how much money you need upfront
Speed, or “Brevity Is the Soul of Wit”
Another thing to consider before bringing on a B2B funder is exactly how long it will take you to get paid. Depending on the specific invoice financing company you’re talking about, you could be looking at anywhere from the same day to a week or more before you receive your payment. If you’re in the type of situation where you need to get money as quickly as possible, this should absolutely become one of your top priorities.
Offline vs Online Platforms
Finally, you’ll want to consider what type of platform you’ll be working with before you bring on any B2B funder. Many modern-day companies offer online platforms, which are not only convenient, but are also generally quicker in terms of both approval and receiving your initial payment. Many particularly forward-thinking companies often have mobile apps, which allow you to manage all aspects of your account while on the go from your smartphone or tablet.
Offline platforms, on the other hand, are more likely to require long-term contracts and likely have monthly minimums or other hidden fees. You may also be dealing with a situation where you are being asked to send physical copies of documents, which will only add time that you may not be able to afford. However, offline platforms also have stability in their favour — you don’t have to worry about losing access to your account if the internet goes down. While online platforms are generally preferred, as always, you should make the choice that is right for your situation and your situation alone.
21st Century Funding
The types of challenges that businesses face today are, in many ways, as old as business itself. Try as hard as you’d like to avoid it, but there will always be certain customers who don’t pay on time and other cash flow problems that rear their ugly heads at the worst possible moment. By making an effort to know the amount of money you need before you bring on a B2B funder and by looking for transparency, favourable contract terms, and at things like advanced rates, you put yourself in the best possible position to secure the important funds you need when you need them the most.
Who is OptiPay?
OptiPay, one of Australia’s leading business finance providers, has been dedicated to helping small business owners solve cash flow challenges for over a decade and has provided $1.5 billion in business funding to more than 500 Australian businesses. OptiPay specialises in modern financing solutions such as invoice factoring, invoice finance, debtor finance, and lines of credit. OptiPay’s mission is to support business growth providing liquidity in as little as 24 hours, ensuring they have access to tomorrow’s cash flow today. This rapid access to funds helps businesses maintain smooth operations and seize growth opportunities without the stress of cash flow constraints. At OptiPay, we believe that healthy cash flow is the lifeblood of any successful business. Our commitment to helping businesses overcome financial hurdles and achieve their growth ambitions has solidified our reputation as a trusted partner in the business finance sector. Whether you are looking to stabilise your cash flow, expand your operations, or navigate financial challenges, OptiPay is here to support your journey with innovative and efficient financing solutions.
