Invoice Finance – Unlock the value of your debtors
Invoice Finance is a highly flexible finance solution often overlooked by business owners.
It is ideally suited to businesses with a quality debtor book, focused on growth.
Invoice Finance, unlike traditional forms of business finance, does not require real estate security. The loan is secured by the debtor book and director guarantees.
Why You Need Invoice Finance:
When your business operates on credit terms, waiting for payments can impede day-to-day operations and hinder growth. This challenge becomes even more pronounced during growth phases when every sale requires funding.
Invoice Finance transforms this landscape. With this innovative solution, you receive payment for your invoices, typically within 24 hours of issuance. It liberates you from cash flow concerns, allowing you to channel your energy into steering and expanding your business.
Explore the Benefits:
Key benefits of Invoice Finance include:
- You no longer wait 30, 60, 90 days, or longer days to receive cash from a sale
- Because the facility doesn’t require real estate security, you can free up your home, (or other property), for alternate purposes
- Invoice Finance is highly flexible. As your business grows so can the facility. (Avoiding the need to continually renegotiate facility limits)
- You can choose which invoices to discount
- You only pay interest on what you use (lenders do however also include a line fee)
- The application process is far less onerous and faster than traditional forms of finance
How Invoice Finance Works:
The strength of Invoice Finance is its simplicity:
- You make a sale and issue an invoice.
- The lender advances an agreed-upon percentage of the invoice amount (e.g., 80%).
- When your customer pays, you receive the remaining funds.
- Due to the debtor book serving as primary security, many lenders may recommend Debtor Insurance (which they can arrange if necessary).
Getting Started - Information You'll Need:
Information required may vary slightly depending on the lender, but generally includes:
- Aged Debtor Listings (some lenders may only require a debtor summary).
- Aged Creditor Listings (some lenders may only need a summary).
- Profit & Loss, Tax Returns for the past 2 years
- Profit and loss statements and tax returns for the past two years
- Year to date management accounts.
- ATO portal access.
- Copies of quotes, purchase orders, tax invoices, proof of delivery, and remittance advice for top debtors.
- Supply agreements/contracts for major debtors (if applicable).
What much does it cost?
The cost of Invoice Finance is comparable to an unsecured overdraft and is determined by several factors, including:
- The quality of your debtor book and concentration risk
- The business performance
- Your credit rating
- The size of the facility
- The Lender’s appetite
However:
- You only pay interest on the daily balance
- Interest is commonly calculated daily and charged monthly
- The cost will include a Line Fee which is charged monthly
With Invoice Finance, you have the choice of whether the financing arrangements remain confidential or disclosed:
With Invoice Finance you can choose whether the finance arrangements are confidential, or disclosed:
- Confidential Invoicing: Customers are unaware of the financing arrangements, and you manage debtor collection.
- Disclosed Arrangement: The lender offers an end-to-end solution, handling collections, etc., and customers are informed of the arrangement.
Importantly, you can tailor your choice to best align with your business needs.
Ready to unlock the power of Invoice Finance? Get in touch with us today
Why Choose The 500 Group
At The 500 Group we specialise in arranging finance for business owners.
Whether you need invoice, business, equipment, or home finance, our team of specialists can assist. We offer our clients one contact point for all their finance needs.
Our panel of Lenders includes Lenders that specialise in Invoice Finance and some of the major Banks.
To save you time, we undertake research to find the Lenders who are the most competitive and suited to your business. We also handle negotiations on your behalf.
If you would like to learn more about Invoice Finance and how to unlock the value of your debtor book, don’t hesitate to reach out.
