Invoice Factoring: Sydney Business Owners’ Solution To Cash Flow Security

Every business owner in Sydney, and elsewhere in Australia, is very much aware that steady and continuous business growth can always come up against several challenges and hardships. In spite of the perseverance, hard work and the late hours put in to make sure the business not only performs according to plan but that it also exceeds fiscal expectations, there is always the danger of the business heading to cash flow problems.

Restricted cash flow can seriously impede business growth, whether it’s the money needed for day-to-day operations or the cash to be used for investments. This usually happens when clients neglect to pay on time or do not actually pay at all. Some businesses, rather than waiting around for clients to meet payments, pursue a feasible, faster way to get capital, which is through invoice factoring. Sydney companies that are dealing with cash flow issues can use their existing invoices to access funding for expansion or growth.

Factoring has become an ideal source of working capital finance because bank financing is simply too restrictive, especially since after the recession and any credit crunch. With invoice factoring (also referred to as debtor finance), the company only needs to send the invoice details to the finance provider of the owner’s choice. The finance provider then sets a percentage of the face value of the invoice and the funding may be accessed the next day or within a couple of days. The percentage of funding that comes from invoice factoring or debtor financing will depend on the finance provider.

Different finance providers for short-term funding and business requirements will present different terms as well as processes for invoice factoring or debtor finance. Melbourne and Sydney companies would do well to compare different finance providers before deciding to use one. If funding is needed the soonest possible way, then consulting a finance provider that guarantees to release the cash advance and transfer it to the corporate account the very next day, when all the invoices have been approved and requirements have been met, is the best course of action.

In addition to just considering the processing speed, there should be a need to scrutinize the terms of payment, such as the fees and charges.

These and a few more critical details need to be thought of and determined carefully so that the business owner makes the right decision on finding the right source for working capital finance.

About the Author:

Sarah Miller is a business consultant by profession and a content creator, writer and blogger by passion. She had help with this article from CashFlowSpecialists.com.au