As the economy rebounds from the impacts of COVID-19, we are seeing the outstanding opportunities presented from accelerated technology adoption and new ways of working. Financing is a hot topic, given the banks limited capacity to lend to businesses as well as the rise of online lenders and new product lines. One increasingly popular financing solution is invoice finance. It’s a scalable financing solution that uses your account receivables to access additional working capital when required.
Invoice finance allows your business to access cash sooner from unpaid invoices. Invoice finance providers will pay you up to 90% of your verified outstanding invoice value upfront. When your customer pays and the funds are received by your debtor finance provider, they’ll remit the remaining 10% minus a small fee to compensate for early funding. Your business can use this cash instantly to pay your bills, secure new suppliers or invest in growth opportunities. While almost every company that issues invoices to their customers can benefit, there are six key industries that typically benefit the most from invoice finance:
Manufacturing Companies
Manufacturers know how important sufficient working capital is to their business. Without sufficient cash flow, they are limited in their ability to fulfil their orders. Given that manufacturers are not paid until they deliver the product, they need to source their supplies (and pay for them) before they are paid by the customer. Larger orders, while a boon to revenue, are not always a good thing if they challenge cash flow, putting the company at risk.
Manufacturers can use their large unpaid invoices to raise the cash they need to source supplies, pay their staff during the process, expand their business into new tenders and markets, upgrade their factories and buy new equipment to make their operation more efficient and cost-effective.
Staffing and Recruitment Agencies
While staffing agencies do a great job finding people work when times get tough, they can often experience cash flow issues themselves. There are many reasons for this, but here are the top three:
- Seasonality. Some periods are much slower than others. Bills still need to be paid, so naturally, cash flow can take a dive.
- Slow paying customers. A rampant issue that seriously impacts agencies. Sometimes clients take a long time to pay.
- Periods of rapid growth. New staff need to be hired, and expenses are necessary to grow the business.
Invoice finance allows agencies to access the cash they need instead of being at the mercy of their unpaid invoices.
Energy Businesses
Energy management and related business are often heavily handicapped by their access to working capital. Growth opportunities are often highly capital-intensive and require investment, which can’t be done if you’re always waiting on customers to pay. Dealing with large companies often exacerbates the issue as they demand aggressive credit terms. Seasonal trade is also a big issue as there will be periods where energy use of demand fluctuates dramatically. Invoice finance helps smooth out the gaps while freeing up cash for when you really need it.
Construction and Property
Construction is a staple of the Australian economy, and constituents are well known to experience serious cash flow issues when times get challenging. Rising costs of supplies, such as brick and wood compounded by slow-paying customers, can make even the best operators struggle from a cash flow perspective. There are also seasonal demands at play as well as the requirement to purchase equipment before construction and have the resources to bid on new projects. Customers do not want to deal with an unstable construction business, so there is a serious need for a financial solution that solves these issues – queue invoice finance.
Healthcare Providers
Health has been even more essential than usual over the past eighteen months. Even the very best healthcare companies may experience cash flow issues from time to time. Dealing with insurance companies means that they’re not always paid when expected, and there is a need to balance claims against the rising costs of medications and supplies. It’s not that easy to get customers to pay their bills any faster either, so the benefits of invoice finance are clear. The cash can be used to pay medical staff, rent, purchase new equipment and paying other necessary suppliers.
Information Technology
Technology is the future, and you need the finance to fund it. Electronics are advancing at a rapid rate, and every year makes progress over the last. Every business needs to stay up to date and source the most competitive equipment. Again, IT companies need to source the hardware and software to sustain a growing and competitive market. Those with reliable cash flow are better placed to service their customers. Mega-corporations are often suppliers, driving aggressive credit terms, making it even more challenging to keep up. Fortunately, invoice finance helps close this gap between the cash coming in and the money going out.
OptiPay helps small and medium businesses sustainably access the working capital they need to support their operations, pay their bills and expand. Turn your unpaid invoices into the cash you need by making OptiPay your partner for flexible business finance today.
