FAQ
OptiPay provides innovative, easy, and affordable ways of helping you and your business get access to tomorrow’s cash flow today. OptiPay provides four market leading and innovative cash flow solutions. OptiPay has its own funding to provide to businesses, having funded in excess of over $1Billion to hundreds of Australian businesses already, without the hassle and restriction applied by banks and traditional factoring companies.
No! OptiPay is not lending you money, therefore there are no regular weekly or monthly repayments which creates an ongoing liability.
OptiPay’s innovative cash flow solution, using debtor funding, requires no property security as collateral. We use your Accounts Receivables ledger as collateral. The larger your ledger, the more funds we will advance you.
OptiPay’s funding to your business is an advance against your issued but unpaid invoices to your customers. You tell us how much money you need and provided you have sufficient debtors (unpaid invoices) in your ledger, we will provide you with the required funds.
You can draw down on these funds at any time and for any amount (minimum $50,000/month) provided you have at least sufficient outstanding debtors for the amount you require.
As your debtor/s pay their invoices as per your current payment terms with them, you are then able to repeat the process of re-drawing down the funds you require, over and over. The OptiPay “business loan” or invoice finance as we like to call it, can be utilised as and when you need it.
It is the same concept as offering an early settlement discount in return for a debtor paying their invoice/s immediately.
So unlike a loan, you are not locked into daily, weekly, or monthly repayments; in fact, there are no repayments at all, we simply wait for your debtor to pay (as per the trade terms you have agreed with your customers) and when they do make payment, we repay ourselves, less a small discount fee based on the face value of the invoice.
It may sound complex, but in fact, it is very straightforward. When your business delivers goods or services to your customer on trade terms, you raise invoices which are current assets to your business sitting in the Account Receivables of your Balance Sheet.
The process of unlocking cash flow against your unpaid invoices — also known as invoice financing, invoice discounting, or factoring — is the sale of these unpaid invoice/s at a small discount to the face value of the invoice in order to speed up the cash flow for your business.
It’s similar to offering a discount on your invoice to a debtor if they paid you ”cash on delivery”, but as we know, offering debtors discounts to speed up payment rarely works.
So by getting your money upfront, instead of waiting 30 to 90+ days for your invoices to be paid, or needing to offer customers discounts for early payment, businesses can meet many of their working capital needs including major investments with invoice finance.
With OptiPay, you can elect to raise cash flow finance from all or part of your accounts receivables ledger.
The choice is yours giving you complete control of your business cash flow.
To get access to cash from their Account Receivables Ledger rather than waiting for their debtors to pay them, these funds can then be used to run and grow the business.
It is the same concept as offering your customer (aka debtor) an upfront discount if they pay your invoice early, and it allows businesses to obtain an advance of up to 90% of the invoice value with the 10% balance (less a small fee) received when the debtor pays.
From time to time, most businesses have offered their slow-paying debtors a discount for paying their invoices promptly. That is what is called a “pre-agreed discount rate”. (E.g. “Please pay this invoice in full by the 15th of the month to receive a 10% discount.”)
However, by simply stating this on your invoices it rarely works, so OptiPay has developed a solution to get your cash flowing faster by providing access to funding. OptiPay will pay you up to 90% of your invoice/s value upfront in cash. The rest is then paid to you once your debtor pays their invoice in full — minus a small pre-agreed discount rate (usually a lot less than the early settlement discount you would have given to your customer), which you have agreed to with OptiPay before entering into the arrangement.
There are no hidden fees or surprises.
While invoice finance is the sale of an asset (being the unpaid invoice); factoring is a debt facility secured against the value of the borrower’s Accounts Receivable Ledger (debtor ledger). Being a debt facility, the approval process to obtain factoring is significantly more onerous with rigorous lending criteria. This means many businesses may not qualify for factoring when they may well qualify for Invoice Finance.
Invoice finance provides far greater flexibility than factoring, because it not only enables you to raise cash flow against single or multiple invoices when needed without entering into lengthy and potentially expensive “lock in” contracts, but most importantly invoice finance is aimed at growth businesses that require cash today to fund working capital needs in order to continue on the growth trajectory.
Invoice finance is assessed on a business’ current and future revenue and is accounted for through the profit and loss of the business. Whereas a factoring facility is a debt facility and is often classified as a liability on the balance sheet.
Typically, you receive up to 90% of your invoice/s value up front, in cash.
You then receive the balance of each invoice, less the pre-agreed OptiPay discount rate, when your debtors pay each invoice.
Any business with an Australian Business Number (ABN) that is supplying goods or services to other Australian businesses on trade terms (i.e. not cash on delivery).
OptiPay charges no upfront application fees to set up an account, nor does OptiPay charge weekly or monthly interest and principal repayment fees like a traditional unsecured business loan. OptiPay will advance you funds against your debtors ledger and/or purchase orders received and only when your debtors pay their invoices, does OptiPay charge a small discount fee. What this means is that you make no ongoing interest repayments at all, instead you get your cash immediately with no upfront cost. The actual discount fee charged by OptiPay (and this is only charged when your debtor pays their invoices), varies based on the size and value of your business and the debtors being funded, suffice to say that it usually works out cheaper than taking out an unsecured business loan or even an unsecured overdraft facility. Yes, that’s correct – simple and fair.
If you are a new client, it will take approximately two business days from you submitting your completed application and supporting documents for us to assess your application to become an approved client on the OptiPay platform.
As soon as you’re approved, you can then upload some of your invoices or your entire Accounts Receivables ledger and you will receive the funds on the same day as the invoices are verified.
Invoice Financing is not new. It’s a well accepted form of cash flow management that’s proving very popular and is a very big market in Australia and overseas.
The way OptiPay facilitates the funding transaction is new, being a FinTech we ensure that the process is quick, simple, streamlined and pain free.
Certainly not.
It’s a practice that’s so well established and commonplace, your debtors are probably already dealing with other clients using OptiPay, or some other debtor finance provider.
They may even use it themselves.
In fact, over $64.2 billion was funded via invoice discounting in Australia alone in 2016. Debtor finance is now accepted as a commonplace business financing tool for growth companies. Many business owners look at it as the smart alternative to a debt facility to help them get access to cash in order to grow.
When you raise cash flow with OptiPay, the initial cash flow – up to 90% of the invoice value – is paid directly to your business operating account.
When your debtor (trade debtor) pays the full invoice amount, it is paid into a bank account that is in your company’s name controlled by OptiPay. Once the funds are received from your debtor, we will transfer the remaining portion of the invoice value (less the pre-agreed discount fee), to your business operating account within the next business day.
If an invoice you have sold to OptiPay is not eventually paid by your debtor as a result of your debtor going into Administration you will be covered by our OptiPay Secure debt protection product which ensures that we are able to claim for the outstanding monies through insurance, avoiding the need to come back to you for recourse to pay us the funds.
OptiPay has been designed to help your business. As such, it is very simple and easy to use, and because it’s a web-based application you can access it whenever and wherever you need to. You simply upload your invoice/s and supporting documentation to us. It’s that easy. Once you have been setup on our system, there is absolutely nothing for you to do other than provide invoices to us, as and when you would like them funded. The rest is all taken care of by our excellent support team at OptiPay.
OptiPay is completely secure. It uses the OptiPayEx platform so no party other than you (when logged in) are able to view your financial information. We have the highest encryption and cyber security protections implemented into our software.
Of course you can OptiPay regularly deals with many financial institutions.
As such, we can work with your bank or financier to implement a funding solution appropriate to your needs and that of your bank. We either work alongside each other or if more appropriate we could even replace your bank (especially since we do not require any property as security).
Absolutely.
Quite often a business will use OptiPay in conjunction with a business overdraft or other debt facility.
Chances are, you’re maybe paying too much at the moment or you might want a more flexible, online and efficient funding solution than your current provider.
In contrast, the funding that banks and factoring companies provide are not as certain because they are able to cut lending facilities or stop purchasing invoices altogether overnight.
Yes, OptiPay does carry out a credit checking procedure prior to offering you a funding facility.
There are checks done on credit records; for fraud and for other pre-existing PPS registrations.
Additionally, your invoices must be issued directly to a business debtor rather than to an intermediary or a consumer. Saying this our credit process is quick and efficient.
The initial invoice value offered for funding needs to be at least $100,000 comprising of one or more invoices. Thereafter invoices of various amounts (as low as $2,000/invoice) can/will be funded with a minimum total funding of $50,000 per month.
Yes, your debtors whose invoices you wish to sell will be aware that you have sold the invoice as we ask them to verify the invoices first. However, debtor or invoice financing, as offered by OptiPay, is such a common form of short term finance in Australia (estimated at over $64.2 billion annually) that it’s become an accepted part of the trading process.
You may well find that your debtor also uses this form of cash flow financing. It is no longer like the “olden days” of factoring when it was frowned upon. Today invoice finance is used for growth businesses that need cash to fund their working capital, for continued growth.
No, we are not a debt collection agency.
No, we only deal with business-to-business transactions.
Given the platform is online, it can handle a range of invoices. But if you have an unusual trading circumstance, it’s best to consult with us in advance so that we can assess your circumstances and structure a funding solution for your business.
While we cannot guarantee that your invoice will be funded, the team at OptiPay will work with you to best understand your business and your debtors and will be able to quickly determine if you meet our criteria for funding.
Supply chain finance is a way to help suppliers and their customers optimize cash flow.
It revolves around:
- The buyer utilises OptiPay’s funding to pay their suppliers “cash-on-delivery” in return for an early payment discount from the supplier.
- The supplier can choose the option to get paid early, as soon as an invoice is approved, and hence get cash upfront in order to purchase more supplies, instead of waiting 30-90 days for payment.
The benefits of better cash flow and working capital optimization can be transformative to businesses. Suppliers become less susceptible to economic volatility and have greater access to working capital to make much-needed improvements to their businesses or to fund new growth initiatives.
There are two reasons why supply chain finance is better than direct lending. First, the interest rate a supplier will pay for a loan will most likely be much higher than the discount given for early payment in a supply chain finance scenario. That’s because supply chain finance funding is based on the buyers credit rating rather than the supplier’s (which tends to be higher given the financial strength of the buyer, being bigger).
Second, a loan impacts the supplier’s financial metrics by contributing to debt outstanding. Supply chain finance has no negative effect on the buyer’s or supplier’s balance sheet.
Trade Finance is a revolving line of credit used to pay your suppliers – using someone else’s money (in this case: OptiPay Finance). This assists business growth while smoothing any cash flow volatility and lets you focus on closing sales rather than worrying about financing them.
Trade Finance functions in the following way:
- You place an order with your supplier (who may be in Australia or overseas) for a product or service and the supplier issues an invoice to you.
- Your supplier usually issues you with an initial invoice to cover the deposit and then final payment (or sometimes just one total invoice).
- On the invoice due date – instead of dipping into your cash reserves to pay the invoice, you submit the invoice to OptiPay who then pays the supplier on your behalf.
- You pay OptiPay back within an agreed time period.
We give you up to 90 days from each funding date to repay us. The sooner you pay, the less interest you pay as it is charged daily on outstanding funds.
Interest is only charged on the advanced funds.
No. We can pay for up to 80% of the invoice value and also cover any freight and transit costs. We ask that you pay at least 20% of the total cost,to cover the initial deposit to your supplier/s.
We offer an ongoing trade facility for 12 months for our clients to get the maximum benefitsthat they can use monthly, in order to smooth out the cash flow requirements of the business on an ongoing basis. Whilst a single funding facility, may help initially it is a band-aid solution and doesn’t resolve the cash flow issues permanently or help the business when funds are required for future orders to suppliers. At OptiPay, our goal is to resolve our client’s cashflow issues on an ongoing basis.
Yes you certainly can. At OptiPay, we work with you to solve your business’s cash flow issues permanently, whether that means we put place an Invoice Finance and Trade Facility together it’ll come down to whats best for you and your business and what will solve your cash flow problems.
Depending on the type of inventory (eg: perishable products are not suitable, nor is capital equipment); The Stock Turn Days; The stock management system that you utilise, and general accounting procedures of the business, OptiPay will be able to assess if your business is suitable (which may require an independent valuation of the stock depending on its age).
Based on the valuation a credit limit will be determined by OptiPay and you can draw down funds to purchase new stock. As the stock is sold and debtor payments collected, the Inventory Finance Line of Credit is paid down. You can then draw again and the cycle repeats.
Inventory Finance works in conjunction with our Invoice Finance (Line of Credit) product so as you raise invoices, you then repay this revolving facility from your available funds.
A revolving Line of Credit that can be used to pay suppliers, sub-contractors or other creditors with flexible repayment periods tailored to suit your businesses cash cycle without the need for property security.