A business cannot be successful unless the cash inflow and outflow is well managed. Unfortunately, many Australian businesses are challenged with delayed payments from customers which causes cash flow gaps that stunt growth and constrict potential profitability. In order to combat delayed and late payments, small Australian businesses are leveraging invoice financing solutions.
In layman’s terms, invoice financing is a flexible financing solution that allows businesses to give their outstanding invoices to a third-party finance provider and, in turn, receive immediate capital.
In this article, OptiPay delves deeper into the benefits of invoice financing, including how the service empowers businesses to thrive and achieve optimal operations, but first, let’s explain invoice financing in greater detail.
What is invoice financing?
Invoice financing, or cashflow finance, is a form of business financing that involves giving outstanding invoices to a financial provider, such as OptiPay, who advances a portion of the value of the invoice. This value is then provided to the business as debt-free capital, meaning the cash is available for immediate use and does not accrue interest or require regular repayments.
The financial provider now holds the risk and responsibility of chasing the unfunded invoice and obtaining the owed funds. Once the debtor pays the invoice, the remaining value on the invoice (minus the provider’s fees) is given to the business.
How does invoice financing empower businesses to thrive?
Invoice financing is a powerful cash-flow management tool that enables businesses to be in a constant state of positive cashflow, which then can be distributed through growth-focused channels.
Invoice financing enables business owners to;
Increase sales and improve the profit margin
Removing the null period between submitting an invoice and receiving the payment allows businesses to take advantage of early payment discounts from suppliers, negotiate better terms with vendors, and invest in growth initiatives that continue to increase profits.
Reducing the amount of illiquid cash that is tied up in invoices provides businesses with the freedom to strategically plan operations, better manage their finances and achieve financial freedom.
Unlock liquidity without long-term debt
Unlike traditional bank loans, which commonly require asset collateral as reassurance and have fixed repayment terms, invoice financing is not long-term debt. This preserves a business’s financial flexibility, permitting access to capital without taking on additional liabilities or debt.
Because invoice financing is not long-term debt, business owners can take advantage of cash advances to fuel the businesses growth whilst maintaining their financial health.
Receive growth capital without regular repayments
Unlike other business loans, invoice financing solutions do not come with regular repayments as the provider collects the invoice value directly from your customer. As you do not need to ensure your repayments are made on time and sent to the correct account, you can make better use of your time by distributing the funds in the appropriate marketing channels, such as social media and website development, to drive growth and increase your customer base.
By eliminating the need to make frequent repayments, you can focus on strategic business initiatives rather than stressing over what day of the week you must make a loan repayment.
Scale operations faster
Invoice financing can provide you with usable capital in as little as 24 hrs. With almost immediate access to cash, invoice financing solutions can fuel business growth initiatives by widening your budget, without taking on additional debt, and providing the cash flow needed for operation expansion, new hires, new equipment or paid marketing activities.
Therefore, you can fast track achieving your growth ambitions by skipping the period of struggle most small businesses incur – the period of time that resembles a game of chicken and the egg – hustling to increase your client base so you can write more invoices to the delay in obtaining accounts receiving slowly decreases in significance.
Leverage customisable financial solutions
Invoice financing is a flexible business funding solution that is tailored to suit the business’ needs. The process is similar to a suit – entirely customisable, especially once strong relationships are established and the business proves their credibility to the financial provider.
You as the business owner or manager can choose which invoices you’d like to receive finance for and when, allowing you to manage your cash flow in accordance with your business cycle.
The total capital you receive is determined by your invoices, and as you increase your sales you can also increase the amount you receive in cash advancements (again, without long-term debt) – providing you with the necessary monetary support and flexibility to scale your business.
Redirect energy into growth focused, productive tasks
Invoice financing offers many layers of benefits for small businesses. Predominantly, you are obtaining your accounts receivable ahead of their due date, but in addition, you and handing the responsibility of payment collection to an external, third party.
By delegating this responsibility and risk, it frees up you and your employees time to focus on more productive tasks, such as sourcing new partners, creating marketing campaigns, developing operations and executing innovative product and service plans. It’s a win win – you improve your cash flow and redirect the time you would spend chasing payments into growth opportunities.
In conclusion, invoice financing empowers businesses to unlock their ideal cash flow and thrive.
Invoice financing provides Founders and CEOs with immediate access to cash which accelerates growth, simplifies cash flow management and combats the struggle of bootstrapping.
With its flexibility and customisation abilities, it can bridge cash flow gaps, encourage creativity and innovation, and optimize financial operations.
By acknowledging the risk-free benefits of invoice financing, and understanding how to best leverage the finance solution, businesses can shorten the road to profitability, increase their market share and achieve long-term success.
So, what are you waiting for? Seize your opportunity to scale your business and thrive with invoice financing. To speak to an OptiPay representative about our