We’ve covered a lot of ground in this blog on invoice financing, but it’s time to get back to the fundamentals – after all, more than 30% of qualified firms are still ignorant that it exists.
Invoice Finance, also known as Invoice Discounting or Debtor Finance, is a type of company financing in which cash is secured against the value of unpaid bills. In other words, it enables a company to quickly access all of the money locked up in its accounts receivable, rather than having to wait for 30, 60, or even 90 days for a client to pay the bills it has issued.
There are several types of invoice financing, some of which entail a company handing over its whole invoicing process to a factoring company. However, this is not what CBM Accounting:offers: with our Invoice Finance service, customers can choose to discount only some of the bills or even a lesser percentage of the invoices in order to have a portion of the monies advanced beforehand in those months when the firm has significant cash flow. It’s fine if the company doesn’t require all of the cash from discounting all bills. CBM Accounting: allows you to do this as long as the monthly minimum service charge is met.
How it Works
It’s easy to receive cash for your overdue invoices with CBM Accounting: once you’ve set up an account and your debtors have been approved (which may take as little as 48 hours), you can simply utilize our real-time software interface to collect cash for your outstanding invoices. You may generally obtain up to 80% (and occasionally even 90%) of the invoice amount upfront. When your client settles the invoice, you will receive the balance, minus our discount costs.
Because invoices aren’t usually paid until 30, 60, or even 90 days after receipt, a business can raise significant amounts of money by issuing invoices and receiving 80 percent of the funds upfront rather than waiting. This can be used to fund growing operations, one-time large orders, working capital, investments, and much more.
It’s crucial to note that Invoice Finance is not a loan facility; rather, it’s a service that allows a business owner to instantly access money from outstanding invoices. Unlike a loan, there are no repayments. It simply works by waiting for your consumer to pay their invoice 30, 60, or 90 days later, after which the money that was supplied to you ahead are “repaid” or offset.
Benefits of Invoice Finance
Invoice discounting is a simple, convenient, cost-effective, and safe way to acquire funds for your company.
Within days, you may open an account with CBM Accounting: and get payment from invoices within 48 hours after approval. Any company that invoices other companies (rather than selling to consumers) is qualified. The amount of finance available to a firm is always suited to the size and cash flow demands of a business since it is based on the amount that is invoiced each day, week, or month. It is, nevertheless, worthwhile to browse around because invoice finance costs might vary significantly between suppliers.
It’s also worth mentioning that with Invoice Finance, you only get the cash you need when you need it, and it’s all depending on the size of your receivables ledger. Compare this to the time-consuming process of obtaining a company loan, which, if approved, would bind you for a certain length of time with fixed interest and principal installments until the debt is entirely repaid.
Another significant benefit of Invoice Finance over company loans that is frequently ignored is the lack of risk: with a loan, you are bound by a payback schedule, and missing one can result in major issues. If a CBM Accounting:-funded invoice is not paid by your debtor as a result of your debtor’s bankruptcy, TIM will reimburse you. will be covered by our CBM Accounting: Secure debt protection insurance product.
Who can use Invoice Finance?
As previously stated, invoice financing is available to any firm that sells a product or service to other companies on a payment-by-invoice basis (i.e., not selling to consumers). Indeed, it is considerably more common in certain nations than it is in Australia, simply because more businesses are aware of the benefits it provides.
Whereas Invoice Finance in Australia accounts for around 3.9 percent of GDP, with around AU$7 billion lent at any given time, cash advanced to businesses in the UK accounted for about 19 percent of the total economy last year. At the end of 2018, invoice and asset finance totaled over AU$42 billion.
Firms in nations such as the United Kingdom and the United States have found that once they taste Invoice Finance, they will utilize it since it is such a practical, efficient, and cost-effective way to support expanding businesses’ operations. More and more Australian businesses are becoming aware of this and contacting CBM Accounting.