Cashflow finance is a form of financing backed by a company’s receivables. How this works is that, once you have delivered your goods or services to your clients, you can forward a copy of the invoice to your financier and they will make funds available before your customer has paid.
Understanding cashflow finance
Cashflow Finance works by turning invoices into immediate working capital. This then provides your company with up to 90% of the invoices face value in as quick as 24 hours. The remaining balance less any accrued charges is made available once the customer has paid the invoice.
4 major advantages of cashflow finance
The first major advantage of cashflow finance is that it may eliminate any cash flow problems arising by giving you cash on hand to pay for your expenses. This can benefit new or growing companies in particular as the early growth phase of a business is one of the most challenging times for a company. As your sales grow, you can be confident that your Cashflow will follow at a similar pace. The additional cash flow can be used to purchase more stock, hiring more staff, or advertising your business.
The second advantage of cashflow finance is it can cover the gap of slow payments. For instance, if you received an order for $20,000 but you have to pay your suppliers $10,000 within 30 days, and your customers won’t pay you until 60 days. Cash flow finance will allow you to release immediate cash from existing sales invoices to cover the 30 days gap.
The third advantage of cashflow finance is it also allows you to avoid any production interruptions. For instance, if your business is profitable on paper, that will not necessarily keep your employees working or your suppliers sending you materials if you are unable to pay them on time. Having an adequate cash reserve will help you meet ongoing expenses.
The fourth advantage of cashflow finance is as your business grows your facility can grow at the same pace. So the more sales you make, the more cash you can get.
How does cashflow finance work?
1. Invoice your client and send us a copy
2. We advance you with up to 90% of the invoice value
3. The remaining 10% is credited to you once your client pays us.
To find out more call 1300 937 292 or fill out our quick contact form and a cash flow expert will be in touch shortly.