Invoice Based Financing for Small Business

By: Paul Raymond0 comments

For small businesses, the real key to success is maintaining a steady cash flow. Invoice financing involves your business selling its unpaid invoices to an invoice financer (Factor). In return, the factor gives immediate access to cash, normally 70% – 90% of the invoice value. This money can be used to expand the business or acquire more assets.

Getting big funds for your business is quite difficult most of the time. You may not have the asset needed to act as security, or your business would probably not have a steady cash flow at the time you are going to request for funding. With invoice based finance, you do not have to worry about having any assets or property that you can provide to lender as collateral. It is an easy and hassle free way to receive cash, fast.

Customers may take a long time repaying back their invoices. Some may take more than 60 days. What happens when you need to make a purchase or need to pay your employees their weekly wages? Waiting for a long time for money to be paid back by customers without having an alternative source of steady cash flow can bring a business down to its knees. Invoice based financing has several advantages that has made it a favorite to many small business owners in Australia.

Advantages of invoice based financing

  • You are able to receive cash once the invoice has been raised and sent to the customers for payment. This helps in improving cash flow and working capital to your business. You need a steady cash flow to purchase more items for your business
  • Helps reduce late payment invoices from your customers. They factor helps bring in all payments in good time.
  • The cash received as financing can be used to meet payroll obligations, purchase new equipment or finance business expansions. Happy employees help in a business’ success. You do not want to have a high employee turnover because you are unable to pay your employees.
  • Invoice financing solves cash flow problems. You are able to get cash from the financers before your customers have paid their cash. Once the factor has received your invoice, he gives you the finance minus a small percentage. Which in most cases, can be paid back once the factor has collected money from the customer and subtracted his fees.
  • You do not require assets or property as collateral. Your invoice is your collateral. You do not have to worry about your assets being repossessed by the bank for not being able to service your loan. Having items repossessed by the bank will reduce the director’s confidence in expanding the business.
  • Easily approved. In most cases, it takes up to 48 hours for your cash to be released to you. Saves you the hassle of running around, ensuring everything is in working order before you can get a huge loan form the bank.
  • Invoice finance provides a flexible source of income. When you feel stuck but you have unpaid invoices, you can source for financing.
  • The amount of funding available is based on the sales you make. The amount given will be based on the invoice(s) you give when you are looking for financing


Many people fear the services of am invoice based financer as they think that it will cause alarm amongst their customers that they are having financial difficulties. This is not something to be feared. If anything, having a good relation with a factor helps your business. Once you receive your cash, the factor follows up with the customers who have unpaid invoices. You benefit from having a dedicated credit controller helping you get paid.

Previously, most business owners had a rough time trying to expand their business as they did not have the required items for getting a loan from a bank. Invoice based financing is now something most small and medium business people enjoy because it helps them grow their business without having the fear of not having the capital requirement for a big loan. If you are looking for fast and easily accessible cash and have unpaid invoices on your desk, try and engage the services of an invoice based financer.

What’s Next?

Call us today and let us help understand ways you can benefit from invoice financing.

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