what is invoice finance
are you experiencing a cashflow gap? Your clients extend the payment term or you’re considering mortgaging your house to fund your business? Slow down! Invoice finance may be the answer that you’re looking for.
what is invoice finance in Australia?
Invoice finance (also called business line of credit or debtor finance) is a commercial loan secured by your client’s outstanding invoices. In other words, invoice financing happens when a business assigns its sales invoices to a lender in exchange for advanced cash. Industry advance rates can range from 70% to 90% of the value of the invoice.
how does invoice finance work?
When a company supplies a product or provides a service to its customer(s), they create a sales invoice. The company then assign invoices to the lender in return for a cash advance.
When the debtor (aka your client) pays the invoice, the balance of the invoice will be paid to you net of any applicable fees or charges.
An appropriate facility limit is set at the time of the application and is in line with the business’ turnover. However, an increase in turnover results in the opportunity for your business to increase the facility limit.
Not to mention, many financiers in the industry charge a fee based on the company’s total turnover. At thornmoney, however, we charge our clients a drawdown fee, and interest is applicable to the revolving funds in use.
benefits of invoice finance
Invoice finance solutions are one of the most favoured small business loan option. Seeing that it allows a flexible solution to assist you to increase immediate working capital.
- Ideal for B2B businesses.
- A funding alternative that frees cash from your unpaid customer invoices.
- Fund up to 90% of the invoice value.
- Access to funding without mortgaging your property.
- Confidential or disclosed facilities available to your customers.
By using invoice finance, thornmoney takes out payment term hassle so you can focus on building relationships with your customers.
Invoice finance gives B2B companies the confidence to take on new customers, new orders and offer varied payment terms. Hence, thornmoney’s invoice finance product can accommodate faster cash cycles and fuel growth.
Invoice finance/business line of credit is offered to B2B clientele and not private individuals.
Moreover, costs incurred through having this product may reduce profit margins. However, by doing so, you can have the money you need promptly to run and grow your business.
how is invoice financing different from a traditional loan?
Invoice finance solutions are more flexible than a traditional bank loan or overdraft. To put it differently, while a traditional loan or overdraft limit is typically restricted by the value of the collateral used. A thornmoney‘s invoice finance facility limit can increase as the business grows, allowing businesses to access more working capital.
Additionally, repayments on a traditional fixed-term loan can also be a drain on working capital. With invoice finance, the loan is secured against money owed by the client’s customers. In simple terms, thornmoney’s product is an advance on the client’s assets.
which industries can benefit from this funding option?
Invoice finance can be an effective finance solution for B2B clientele that offer extended payment terms to their customers.
Invoice finance is best suited, but not limited to, businesses in the following industries:
- Wholesale trade
- Recruitment and labor hire
- Transport and storage
how does invoice finance help small businesses?
Thornmoney has been helping several small businesses across Australia, from companies in big cities to those in further outback areas.
Read how our product “rescued” a family-owned agriculture business in Western Australia.
Or see how a transport and logistics family business break the boundaries and “take off” with thornmoney’s assistance.
why choose thornmoney invoice finance?
A lack of working capital is a drain on productivity and growth. At thornmoney we work with businesses of all sizes, helping our clients to find the best working capital solution for their needs. If your business needs an immediate cash injection to secure its long-term profitability, a facility with thornmoney could be the ideal solution.
Our cutting-edge digital thornmoney platform simplifies the traditional paper-based application process of supplying supporting documentation, streamlining the application process to get a faster decision for your client.
Our platform supports integration into existing accounting packages such as Quickbooks, MYOB, and Xero.
Fees are different to many lenders in the market, and costs can be kept in line with the business cashflow requirements.
If your business is facing cashflow challenges, speak to one of our friendly sales members who can help you find the best solution for you.
Still needing questions answered? Read our key benefits of invoice finance analysis.
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.
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