Having a great product, committed staff and plenty of eager customers often isn’t enough for a small business to grow.
Working capital is essential to grow but can be hard to maintain, especially if the owner’s assets are limited and he/she is unable to fund it personally. What if it were possible for a growing business to have its invoices paid within a few days of you issuing them to your clients?
This solution does exist and is known as debtor financing. Under this model, the bulk (up to 85%) of an invoice is paid almost immediately, not by the customer but by a financial institution.
How debtor finance works
You “sell” your invoices to the lender. The lender then advances you immediate funds of up to 85% of the invoice value. The lender will pay you the rest (less a small fee that goes to the lender for providing you with the upfront funds) when your client settles their invoice in 30 to 90 days time (as per your trading terms with them).
Debtor finance should not be confused with Factoring which is similar but costs the a business a lot more as the financer takes over the entire process of collections and deals directly with your debtors (its like outsourcing your back office receivables person/department). Factoring is not used much at all anymore as it was considered a dirty word back in the day and utilised by struggling (instead of growth) businesses.
Invoice Discounting
Invoice discounting on the other hand provides full flexibility, does not interfere with your accounts receivables department and does not engage with your debtors directly. You retain 100% control of your invoices and your clients/debtors.
Financiers will typically lend you up to 85% of the face value of the current debtors’ book (invoices). The percentage does vary from financer to financer and is linked to the total size of the invoice book, the credit profile and risk of each debtor and the payment history, amongst other credit criteria observed.
Debtor financing, is something every growing business, whether cash flow positive or not, should investigate, especially those on a sharp growth trajectory needing working capital to fulfil purchase orders.
OptiPay (OptiPay) is a leading provider of invoice discounting. Using OptiPay’s services allows you quick access to funding to help grow your business. Our invoice discounting services offer high advances at low discount rates with no upfront fees and opOptiPayal flexibility.
“Get Tomorrow’s Cash Flow Today”
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.
