How Long Does It Take to Secure Cash Flow Finance?

Pro – Easy to Access Invoice Finance is much more accessible than a traditional asset-based secured loan. Even if you have a short trading history, poor credit score, or lack high-value assets on your balance sheet, you can still qualify for an Invoice Finance facility.

Pro – No Property Security You don’t need to use your home as security. With a secured business loan, you risk losing your home if you are unable to make repayments.

Con – Reduced Profits One of the most important considerations for a cash flow lending facility is that you will reduce your profit margin. When you submit an invoice for financing, the funding provider will usually charge a fee based on a percentage of the invoice value. If you rely on high volumes and low margins, Invoice Finance may eat into your profits.

Con – Credit Limit Based on Invoice Value Cash flow lending credit limits are based on the value of your sales revenue. If you need a large lump sum to cover a significant expense, Invoice Finance ount you need. If you’re looking to cover a one-off business purchase cost, Equipment Finance may be a more suitable funding option.

Many growing businesses encounter working capital issues when they take on new customers and enter a period of rapid growth. Cash flow financing can be an effective funding solution if your business suffers from cash flow gaps due to extended payment terms or seasonal sales.

One of the best ways to identify and prepare for potential working capital shortages is to create a cash flow forecast.

It can also be a good funding option if you need a quick cash injection to cover an unexpected expense or capitalise on a time-limited opportunity. According to the latest Australian Bureau of Statistics latest data, 41% of SMEs report cash on hand would not cover more than three months of business operations.

The cost of an Invoice Finance facility depends on the amount of risk involved for the funding provider. The finance company will look at the value and volume of your invoices, the creditworthiness of your customers, and other factors when determining the cost of the facility.

The cost of cash flow Invoice Finance also depends on the type of facility. Invoice factoring is usually more expensive as it involves collections being outsourced to the finance company.

Is Cash Flow Finance Right for Your Business?

Invoice Discounting is typically less expensive, but you will need an established collections and account management team to collect payment from your customers.

You can find out more about the different types of Invoice Finance by checking out our guide Invoice Discounting vs. Factoring.

The application process is much faster than a traditional bank loan. If your financial records are up to date, a facility can be approved within days of your application. Once your invoice has been approved for funding, you will receive a cash advance in as little as 24 hours.

Cash Flow Financing With ScotPac

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Cash flow financing can be an important tool for managing working capital and supporting business growth. It’s a flexible funding solution that allows you to unlock the true value of your business, not just the value of the assets on your balance sheet.

If cash flow finance sounds like it could help your business, fill out an online application or speak to one of our friendly business finance advisors today. We’ll help you understand your options and create a tailored solution that’s right for your unique circumstances.

Pro – Avoid Long-Term Debt Instead of loading debt onto your business, you can release the capital tied up in your accounts receivable. Invoice Finance allows you to boost your cash flow without locking you into a lengthy repayment schedule.