20 Sep Did You Know You Can Get Your Invoices Paid Today? An Introduction to Invoice Financing
As a Wife/Partner of a Tradie who assists in running the business, you know how critical it is to have cash flowing into your business to keep things running smoothly.
Cash flow is king, and it can be incredibly frustrating when you have clients that owe you money, but no money in your bank account.
Unfortunately, late payment on invoices is a common problem for small businesses in Australia and New Zealand. In fact, one study from accounting firm Xero discovered that 30% of invoices for small businesses were paid more than seven days late.
The result of this? Nearly all business owners have considered applying for a loan just to fill in the gaps until your clients pay you. But the process of applying for a loan is time-consuming and cumbersome, and results in more debt for your business.
However, there’s another option; ‘invoice financing’ can get money into your business today, without the long-term loan or commitment..
So What is Invoice Financing?
Invoice financing is a fast, and simple way to get the cash you are owed into your business today.
Essentially, invoice financing enables you to have your outstanding invoices paid today.
When you use invoice financing, you “sell” your invoices to the invoice financing provider, which then immediately pays you. When your client does pay, you repay the provider along with a small fee.
These are three main types of invoice financing to choose from:
- Discounting: When you use this service, you sell all your invoices to the provider in exchange for immediate cash. Your clients won’t know you needed to access the financing option. You’ll pay the provider back once your client pays you, along with a fee.
- Factoring: Invoice factoring means that you’ll sell your invoices and receive cash, but the company you sell the invoices to will also collect payments from your clients. This can be a good option if you have a lot of unpaid invoices and lack the resources to pursue collections.
- Selective Invoice Discounting: This type of invoice financing is also the most flexible option, allowing you to choose which invoices to get paid now — either several or just one at a time, and whenever you need it. Plus your clients won’t know any difference.
Invoice financing is without a doubt the easiest and most accessible solution for short-term financing.
If you want to know why it’s a fast– growing source of cash flow, here are some of the major benefits:
- Quick access to cash. That means you’ll get access to working capital fast, enabling you to pay your vendors and employees, avoid late fees, and run your business.
- Opportunity for quicker growth in your business. You can focus on growing your company because you now have access to hard-earned funds. You don’t have to put your expansion plans on hold while you wait to collect invoices. As a bonus, you’ll also be able to take on bigger projects without worrying about when you’ll get paid.
- Easy to link to accounting software. The better providers will automatically track payments and fees against the invoice that’s being financed. Essentially, the admin and bookkeeping work takes care of itself.
Why It’s Better Than a Bank Loan
Compared to a bank loan, invoice financing is faster, easier, and often cheaper all around.
Applying for a bank loan can take weeks/months, during which you’ll need to fill out mountains of paperwork and face strict approval hurdles. In a best-case scenario, the bank funds your loan, but you now have fixed-term repayments that can also present another kind of cash flow problem; It’s another fortnightly bill that needs to be paid, regardless of payments coming into your business.
When you use invoice financing, the approval process takes just a few minutes — and you could receive money the same day. The better providers provide flexibility so you you only use them when you need it.
How it Works
As you might have guessed, we’re big on invoice financing – which is why we created FundTap to make the process of invoice financing easier than ever. We’re different from other invoice finance in that we work for small businesses. More on this later…
With FundTap, you can create an account and submit your first invoice in minutes. Here’s an overview of how it works:
- Integrate your account with your accounting software such as Xero, Quickbooks, and more.
- Select one or more of your unpaid invoices.
- Submit your invoice for approval, and within hours you can receive the money into your bank account.
- Once your customer pays, you automatically repay FundTap via direct debit.
Why Choose FundTap
At FundTap, we believe that getting cash for your business shouldn’t be a deal with the devil.
FundTap advances your own money on-demand – and from start to finish, we’re the fastest cash injection into your business.
A critical difference with FundTap and all other invoice finance providers is that:
- We don’t need you to change your current invoicing or payments processes.
- We don’t require your customer to pay to our account. All other invoice finance providers require your clients to pay to their bank account, not yours. This creates big headaches when setting this up, confidentiality with your client and hassles with needing to change the bank account with your client each time you want to start or stop invoice financing.
FundTap also has no establishment, admin or system fees. You’re in control. You only submit invoices for us to pay when you need them.
Getting instant access to your money, means you can be prepared for unexpected expenses or grow your business on your timetable.
Here’s what our customers have to say:
“FundTap has enabled us to grow relatively quickly. If we waited for traditional lending, we would’ve been 6-7 months behind where we are now. It relieved a lot of mental stress for me, allowing us to have a safety net to grow our business, gain more customers, and keep on top of our supplier payments.”
-Pranav Maharaj, founder of Outre Clothing
“We are able to achieve scalability more easily with FundTap, making cost savings when ordering larger volumes of ingredients, and having capital available for huge packaging runs with long lead times.”
-Sarah, Co-Founder of YUM
For more info on FundTap and how we can help, see: fundtap.co