Invoice Finance: Say Goodbye to Cash Flow Gaps

If you find cash flow gaps impacting your day-to-day business operations and limiting the potential to take on new opportunities - Invoice Finance could be the solution your business needs.

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What is Invoice Finance?

Invoice Finance allows businesses to secure a line of credit against their unpaid sales invoices. This allows businesses to access funds tied up in unpaid invoices instead of typically waiting for your customers to pay.

The lender advances a percentage of the invoice value (up to 80%) shortly after issuing the customer invoice. Once the customer pays, the remaining balance, minus fees and charges, is returned to your business. 

This provides a reliable cash flow to cover expenses, invest in growth, or manage unexpected costs. This type of facility is flexible so as your business grows so can your facility limit.

Benefits of Invoice Finance

1. Improved Cash Flow: Unlock funds tied up in unpaid invoices to cover expenses and maintain operations. Instead of waiting 30, 60, or 90 days for customer payments, businesses can access funds almost immediately, ensuring smooth operations.
2. Flexible Access: Funding limits that grow alongside your business.
3. No Collateral: In most cases, the invoices themselves act as the collateral, meaning businesses don’t need to pledge other assets like property or equipment.
4. Bridges Cash Flow Gaps: Perfect for managing seasonal fluctuations or covering upfront payments such as payroll and supplier payments.
5. Options for Undisclosed Facilities: It is possible to have an undisclosed facility so your business name remains on the invoice and your customers are not aware of the facility. 
6. Strengthen Credit and Supplier Relationships: Pay bills on time, avoid penalties, and negotiate discounts with suppliers.
7. Prepare for Growth: By having this type of facility in place, you can confidently take on new opportunities, knowing you can fund your operational costs as your business grows.

Who is eligible for Invoice Finance?

You may be eligible for business finance if your business meets the below criteria:

• Your company sells goods or services to other businesses on standard trade credit terms.
• You invoice your customers after the goods or services have been delivered and receive confirmation of the work, such as a proof of delivery.
• Minimum of 6 months in operation, demonstrated through consistent invoicing and collections.
• Your customers are creditworthy Australian businesses with a reliable payment history.
• Your business generates a minimum of $10,000 in invoices per month.
• Your business is registered and operates within Australia, with invoices issued in Australian dollars (AUD).

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Which industries are best suited to Invoice Finance?

Invoice Finance is a powerful tool for businesses in industries with long payment terms or consistent cash flow challenges. It allows you to unlock the value of unpaid invoices, ensuring you have the working capital needed to grow your business. Below are some of the industries that can benefit the most from invoice finance:

1. Transport and Logistics The transport industry often faces delayed payments due to long-term contracts with clients. Invoice Finance ensures transport businesses can manage fuel costs, vehicle maintenance, and wages without waiting for customer payments.
2. Manufacturing Manufacturers frequently deal with large orders and upfront material costs, all while waiting for payment after delivering goods. Invoice Finance bridges the gap, allowing them to meet production deadlines and maintain steady operations.
3. Wholesale and Distribution Wholesale businesses often operate on extended payment terms. With Invoice Finance, wholesalers can access cash tied up in unpaid invoices to purchase stock, fulfil orders, and capitalise on growth opportunities.
4. Cleaning Services Cleaning businesses rely on recurring contracts, but cash flow can be tight due to delayed payments. Invoice Finance helps cover day-to-day expenses like wages, cleaning supplies, and equipment upkeep.
5. Labour Hire Labour hire companies often face the challenge of paying workers weekly or fortnightly while waiting for clients to settle invoices. Invoice finance ensures cash flow remains consistent, enabling businesses to meet payroll obligations and grow their workforce.

If your business operates in any of these industries and faces cash flow challenges due to unpaid invoices, invoice finance could be the solution. It’s particularly beneficial for industries where delayed payments are the norm, and access to steady working capital is essential for day-to-day operations.

‍Contact us today to explore how invoice finance can empower your business to thrive! Lets get started on setting your business up for success!

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What Documents Do I Need to Provide for Invoice Finance?

When applying for invoice finance, lenders require specific documentation to assess your eligibility and the strength of your invoices. Here's a breakdown of what you'll need:

1. Aged Receivables and Payables Reports
   These reports show outstanding invoices (receivables) and debts (payables) to help the lender understand your business's cash flow and creditworthiness.
2. Profit and Loss Statement
   This document demonstrates your business's financial performance, showcasing income versus expenses over a given period.
3. Paper Trail for a Main Customer
   Lenders may ask for evidence of your business process to verify the validity of your invoices. This could include:
   • A customer contract or purchase order
   • Proof of delivery of goods or services
   • An invoice issued to the customer
   • Payment remittance or acknowledgment for a completed job
4. Additional Documents (Depending on Your Scenario)
   Depending on the financing limit requested and your unique business circumstances, you may also need to provide:
   • ATO Portal Access: To confirm your tax compliance and current obligations.
   • Bank Statements: Typically for the past 6 months, to validate cash flow and financial health.

Why Are These Documents Important?

‍Lenders use these documents to assess the quality of your invoices, the reliability of your customers, and your business's ability to manage cash flow. Providing accurate and detailed documentation helps streamline the approval process.

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Need Help?

‍If you're unsure about the requirements or need assistance gathering these documents, we're here to guide you every step of the way.

Contact us today at hello@wcfb.com.au or by booking in a call to get started on securing the invoice finance your business needs!

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FAQs About Invoice Finance

Will my customers find out that I’m using Invoice Finance?

No, your Invoice Finance arrangement can remain confidential. You continue to manage your customer relationships and handle payment collections. Only you and your finance provider, will know about your funding.

What is the process once the facility is set up?

1. You provide invoices for services already delivered.
2. A lender advances a percentage of the invoice value (typically around 80%).
3. Once the invoice is paid by your customer, the remaining funds are released to you, minus any fees.

Is Invoice Finance only for businesses that are struggling?

Not at all. Many thriving businesses use Invoice Finance to scale and manage their cash flow effectively. The more you invoice, the greater access you have to funding, making it a strategic tool for growth.

How is Invoice Finance different from a bank loan?

Unlike business loans, Invoice Finance doesn’t involve fixed monthly repayments. Invoice Finance leverages your accounts receivables as security rather than putting real estate or assets as collateral.

Is Invoice Finance easily accessible?

Invoice Finance can often be easier to access compared to traditional business loans depending on your eligibility. Your accounts receivables serve as the security needed to access funding, making it a simpler and more straightforward option for many businesses.

How is it different from a term loan?

Invoice Finance offers greater flexibility compared to a term loan. While term loans also don’t require collateral, they provide a lump sum upfront, which you repay over time with regular instalments that include both the principal and interest. 

How long does the process take?

The initial set up can generally be longer than an unsecured business loan and may even take up to two weeks. However, once the facility has been set up funding is made in around 24 hours once you draw down on the facility.

Is Invoice Finance too expensive for small businesses?

Not necessarily. While costs may be higher than some secured loans, you only pay for the funds you use, including establishment and line fees. Compared to unsecured loans, Invoice Finance often provides more significant funding options and can be more cost-effective than overdrafts or high-interest alternatives.

Who should not use invoice finance?

Invoice finance can be a valuable tool for many businesses, but it isn’t suitable for everyone. Here are cases where invoice finance might not be the best option:

• You don’t issue invoices
• Your customers pay your invoices shortly after being issued.
• You are invoicing for project payments.
• Start ups without established clients.
• Companies with retention clauses.