how invoice finance helps labour-hire businesses

It’s easy when you operate a business to fall into ‘tail chasing’ patterns, especially when it comes to money. Frustratingly, when you’re a small to medium enterprise, cash flow shortfalls can quickly lead to make-or-break situations.

For organisations like labour hire companies that need to pay their people, no matter what, invoice financing can deliver the financial buffer you need.

how does invoice financing work for labour hire companies?

Invoice finance is also known as ‘line of credit’ or debtor financing. This arrangement fills the financial gap between issuing an invoice to your clients and receiving the funds in your business bank account.

As a labour hire or other company, you often have to wait 30 days or more for your invoices to be paid, even though the work has been completed. Because of this, it’s easy to end up with tens of thousands of dollars owed to contractors or staff, but no cash in the bank to pay them with.

The modern solution is invoice financing. When you use the right provider, you can establish a ‘set and forget’ style arrangement that will pay 75-85 per cent of your invoices as you issue them, even daily if necessary. This result is having the money you need to pay your people, when you need it.

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Read more: What is invoice financing?

new look solutions for invoice financing

The technology supporting invoice financing has improved in leaps and bounds over recent years and thornmoney leverages all the latest innovations. If your business uses Xero, MYOB or Quickbooks, it’s now possible to connect your accounts with thornmoney line of credit platform. After you have completed the set-up process, your accounts will ‘talk’ to the thornmoney platform every few hours. With a few clicks of a button from you, to place a drawdown request before 3pm (AEST) and the funds will be sent to your account the same day.

The process is streamlined, simple and straightforward. Automated online invoice financing requires far fewer phone calls and emails, no paperwork and a great deal less processing time than you may think.

how labour hire companies can access invoice financing

While it can help almost any business, invoice financing makes so much sense for labour companies because of the longer cash cycle.

If your company has a strong credit history and has been operating for more than nine months, you may access invoice finance for as little as $25,000 worth of invoices, and create an ongoing arrangement so you’re never left feeling stressed about cashflow.

This system is far more advanced and cost-effective than a ‘payday loan’ scenario. It is designed to be provided as an ongoing service. When you issue an invoice, approximately 75-85% of the amount will be forwarded to you within 24 hours by your invoice finance provider. Once the invoice is actually paid, the remaining 20% is made available to you (minus the interest and fees).

There is no need to involve your clients in the process. They simply pay the funds into a bank account that has your business name on it; and you can use the same bank account for every client.

When it comes to reconciling accounts, deposited funds can easily be marked in your Xero or MYOB etc platform. The system is designed to be seamless and straightforward. You get a flexible line of credit that can grow with your business, plus freedom from a lock-in contract.

With invoice financing, you only pay for the exact funds you use, and you don’t have to worry about hidden fees or ongoing management fees should you not use the line of credit. You can apply the solution to all your clients or just a few and make updates at any time.

How to apply

The key tip when it comes to invoice financing for small businesses is to choose a smaller provider as you will have a lot more flexibility than you will with a bank.

Contact us today and one of our advisors will respond to help you take your business to the next level.

Disclaimer: This information is for general information purposes only. Therefore, the information contained herein does not constitute financial or professional advice or a recommendation. Ultimately, it has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.