Invoice Finance is Helping SMEs to Grow

Despite trade wars, global slowdowns, and a supposed lack of funding, Australian businesses have clocked up an impressive growth streak since the financial crisis.

That is just as well, because Small and Medium businesses are the lifeblood of the economy. The Australian government’s own figures illustrate their contribution nicely: between 2013 and 2018, the number of small business employees increased by 4.3%, or 197,000.

Most of the credit for this achievement must go to small business owners: they have showed true entrepreneurship by finding ways to thrive even when times were difficult, and business conditions were changing at an unprecedented rate. And they created a fifth of a million jobs in the process.

There is a case to be made that Invoice Finance or Debtor Finance and it is also known – and other so called alternative finance providers – have all contributed to the SME fight back since the credit crunch. While traditional bank lending to businesses necessarily went into reverse in the years following the crisis, the alternatives have and continue to help fill the void.

Aided by advances in digital technology, as well as its wider acceptance and use, a generation of nimble lenders have adapted old business funding methods to a new age. Invoice finance and non-bank business loan providers are among those providing cash to ambitious Australian businesses looking to invest in order to grow. Many of these funding providers are – or were – SMEs themselves.

How Invoice Finance Helps Businesses Grow

Invoice finance in particular has been instrumental in helping thousands of small and medium sized businesses to implement their growth plans.

This is because invoice finance is especially well suited to funding businesses that are growing their revenue: by raising money against their outstanding accounts receivable, businesses are always in receipt of funds appropriate to their current operations. No longer is the bank manager deciding the scope of their investment plans or breathing down their back cause they are not as profitable as the bank would like them to be – now, their own growing revenues are transferred into operational and investment capital within days to ensure they are always moving forward within a sensible financial framework. Often profits lag revenue growth (upfront investment is required before the rewards are reaped) and unfortunately the banks want to see profits not only revenue growth – this is where Invoice Finance comes into its own!

The level of funding through invoice finance can be scaled up or down based on the amount the businesses invoices its client each month, thanks to flexible, funders like OptiPay, businesses are not locked into repaying a specific amount in the case of a loan, the invoice finance facility expands and contracts with the business – allowing the business to only utilise what it requires and more or no less.

Business owners who only went looking for alternatives because they could no longer rely on the banks to fund them, have never looked back after trying flexible invoice finance.

Together We can Keep Businesses Growing

While the Australian economy is still growing, there have been concerns recently that businesses are beginning to struggle. The number of companies entering external administration increased by 11.2 per cent last year, according to Australian Securities and Investments Commission. And there were reports this summer that debt collection agencies were doing a brisk trade as many businesses struggled to pay their suppliers. 

Certainly, sectors such as retail have had a hard year. However, once again flexible finance will help those struggling businesses to get through their bad patches and move forward again. Supply Chain Finance can ensure cash flows quickly from business to business, so that no-one is forced into administration while they are waiting to be paid. When it comes to Trade Finance or Import Finance, it can open exciting new possibilities abroad, by being able to fund the import of products, whilst only worrying about paying the overseas factory 120 days after delivery.

Whether Australia is facing recession or another ten years of growth, the business sector as a whole is far better placed to meet the challenges, because the financing options available to business owners are broader and better than ever before.

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