Invoice finance is an excellent tool for growing businesses to free up cash flow to improve your small to medium enterprise (SME). You’ve gone through the process of applying for a facility or are seriously considering it, and you’ll soon have the cash you need. The good news is that the application process was probably the most challenging part; the bad news is that it’s now up to you to maximise what you do next.
The reality is that the majority of SMEs we see do not know the best way to use the funding they receive from their invoice finance facility. Using your funds efficiently is the key to providing the environment that your business needs to succeed, as well as avoiding a recurring cash flow problem in the future. There are five critical steps you need to take that will help you do just that – let’s take a look.
Figure Out Your Needs
Just like any strategic plan or change, it all depends on your unique needs and priorities. Which areas of your business need more cash flow? More importantly, why? If you’re running behind on necessary commitments such as payroll, tax or debt, that should be taken care of first. When you’ve covered the basics, prioritise areas that would benefit the most from a cash injection. Increasing inventory levels and purchasing more supplies may allow you to generate additional sales, growing your business and profits. A great tactic is to rank a list of candidates in order of importance (financial impact) and then allocate cash progressively down the list as it becomes available.
Don’t Splash the Cash
Needs are more important than wants. The idea is to use your cash flow to satisfy opportunities wisely without wasting it on areas that are unlikely to generate a return on investment. Focus on nailing the basics first, then invest in riskier growth initiatives if your cash flow allows. Invoice finance is also one of the best ways to go about funding a new venture, given there are fewer limitations on what you can use the money for (unlike bank loans that are for a set purpose).
Be Patient and Calculated
Figuring out your priorities and reigning in aggressive spending is best done with a clear, patient mind. Invoice finance is one of the best ways to improve your cash flow, both immediately and in the long run, yet it is also not a miracle. You shouldn’t rely on the cash generated from finance to run your business on its own. Your underlying sales and expenses have to make sense, as does the health of your business. As a general rule, don’t make decisions on the spot when it comes to investments and instead calculate what the best option may be – often, it’s the boring, conservative one, such as keeping your existing customers happy.
Keep Your Eyes on the Future
Yes, solving short term issues is the immediate priority. However, if your SME finds itself caught in the cycle of the status quo, it becomes incredibly difficult to make progress and reach your potential. Paying your bills is vital, but so is planning for the future. Without a long-term business plan, your business may not exist at all in five years time. Invoice finance is an opportunity to free up capital for meaningful, longer-term strategic investments.
Consider investing in areas that will build your brand and efficiency beyond just paying suppliers and securing inventory. How would upgrading your CRM improve customer conversion and feedback? Would spending money on upgrading your social media presence elevate your brand? Not every longer-term investment will bear fruit in a direct, quantitative manner but keeping your eyes on the broader prize is critical to getting the most out of your operations today and in the future.
Consult Your Team and Employees
SMEs are closer to the ground than your corporate counterparts. Use this as an advantage by involving the wider team and employees in the decision-making process. Service-facing staff are the eyes and ears to your customers. What are they saying? What customer preferences are they observing? What do they not like?
Satisfy your staff and your customers by sourcing a diverse opinion base from within your business. It’s not possible to truly satisfy everyone, but solutions that have meaningful inputs will go a long way to making your people feel heard and valued. Employee morale is another qualitative measure that goes beyond the bottom line. Invoice finance should improve the holistic health of your SME, from the financials to processes and to people.
OptiPay helps small and medium businesses sustainably access the working capital they need to support their operations, pay their bills and expand. Turn your unpaid invoices into the cash you need by making OptiPay your partner for flexible business finance 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.
