Funding vs. Lending: understanding the difference
OptiPay
October 13, 2021
There is a wide array of different reasons why a small business might need access to extra incoming cash
Working Capital Finance
Does your business require working capital but you are loathe to take out a business loan which comes with monthly repayments? OptiPay has a solution for you in the form of Invoice Finance.
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What is Working
Capital Finance?
Working Capital is defined as current assets less current liabilities, which is the amount of liquid assets (cash + debtors) less current expenses. Positive Working Capital means the cash at bank + receivables is greater than the current expenses (payables) of the business. Negative working capital balance means the business owes more than it has in cash available and what it will receive as income in the near future.
How Does It Work?
For example:
| Cash at Bank | $100,000 |
| Receivables Ledger | $450,000 |
| Payables Ledger | $300,000 |
| Working Capital | $250,000 |
In the above example, the business has positive Working Capital of $250,000 however the free cash position is only $100,000 as the majority of the Working Capital is locked in the receivables ledger. If there is a timing mismatch between when the debtors pay their invoices and when the creditors need to be paid, the business has a liquidity issue.
This short term liquidity crisis is one that many businesses face, particularly growth companies who need to spend upfront on marketing and opex but the income from that spend may not be received for as long as 90 days later.
A solution to this is
Invoice Finance
OptiPay offers a flexible funding solution which is like a cash flow loan, but without the high fixed interest charges and the usual minimum term.
Quick Online Enquiry
It will only take a few seconds & will not affect your credit rating.
Note: OptiPay funding solutions are only suitable for businesses with annual revenues of $1m+ per annum.
Note: OptiPay funding solutions are only suitable for businesses with annual revenues of $1m+ per annum.
Working Capital Finance Offers A Great Solution To:
- For small and medium size businesses that need working capital to keep growing
- Businesses with annual revenue of at least $1.0 million and who have at least 4 regular paying customers
- For businesses that are coming out of a tough trading environment that need cash today to bridge the gap between invoicing customers and getting paid
- Seasonal cash flow fluctuations
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How Does it
Work?
- After setting up a funding account, invoices are emailed or uploaded to us. OptiPay will then transfer up to 90% of the face value of the invoice in to your account within 24 hours.
- When the invoice is paid in full by your debtor, your business will receive the remaining balance less a small discount fee charged.
- No upfront fees.
How Much Money
Can You Access?
- You can draw down on funds at any time and for any amount (minimum: $100,000) provided you have at least sufficient outstanding invoices to provide for the amount you require.
- The amount of funding you can access is directly correlated to your current receivables ledger, not your past sales and not your debt position of the business.
- As your debtor/s pay their invoices as per your current payment terms, you are then able to repeat the process of re-drawing down the funds you require, over and over. The OptiPay “cash flow loan” or invoice finance as we like to call it, can be utilised as and when you need it and you can access up to $5.0 million for your business at any one time.
- We offer flexible funding facilities ranging from $100,000 to $5.0 million.
Why Invoice Finance?
Solve your business cash flow needs with flexible, fair funding.
We’ve funded over $850 million to Australian business using their Account Receivables ledger.
No Hidden Fees
No upfront Application fees, no property security required and no hidden fees.
It’s 100% Flexible
We’ll provide the flexibility you require in order to manage your cash flows. No long lock-in contracts either.
Funding In 24 Hours
Don’t wait weeks or months for your money.
Benefits of This Offering
- Get funding within 24 hours of providing the required information
- Only pay for what you use when you use it
- No establishment fees
- No ongoing interest charges
- You make no repayments at all, as your debtor pays their invoice so you can then access the funds again (revolving facility)
- Easy, quick online funding process
- No property security required
- No long locked-in contracts
- The amount of funding is based on your sales not on your debt or ATO position of the business
Here’s why Our Clients choose OptiPay
This is Paul, he is one of the directors of UVS, a labour-hire provider to the construction industry. Here’s what he has to say about how OptiPay was able to help his business grow and succeed. Contact an OptiPay expert today to see how we can help you.
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OptiPay Funding Process
5 simple steps to secure funding
Quick same-day setup
- No application or set-up fees
- No long lock-in contracts
- No property security required
Select your invoices and upload
- Choose only the invoices you want funded
- No fees as you add more debtors
Due diligence
- OptiPay checks the credit rating of your debtors and verifies each invoice
- Open and honest appraisals
Access up to 90% of your cash up front
- Get up to 90% of your invoices paid to you without any hold backs or fees
- Get your money within just 24 hours of approval
Access balance of cash
- The more you cash-flow with OptiPay, the lower the discount fee can become
- The balance due on your invoices are paid to you when your client pays their invoice, less a pre-agreed discount rate
- OptiPay is paid when you are paid and not before
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