Invoice Finance is a great working capital solution for businesses. It allows business owners to have full control over their cash flow, facilitating the matching of cash inflows to outflows at its optimal point. From speaking to thousands of businesses, we have summarised the top 7 myths about Invoice Finance for you and how they stack up to reality.
Myth #1 – “Invoice Finance is the last resort for businesses”
In reality, this is absolutely incorrect. Invoice Finance should be one of the first finance facilities considered by new to established businesses:
- Invoice Finance converts your liquid asset i.e. trade receivables into immediate cash and does not add additional liabilities/debts into your books.
- The facility size grows with the business. As your Accounts Receivable grows, your business will be able to draw on more funds.
- Invoice Finance is can be flexible which means you are not tied down by a contractual commitment or ongoing minimum fees.
At InvoiceInterchange, we understand businesses of today seek flexibility to match the different levels of funding requirements at different times throughout the financial year. We also see many success stories of our customers whose business growth was boosted by the support of our Invoice Finance facility. A quick injection of funds goes a long way to support business expansion plans or to help with additional cash flow needs during a busy period.
Myth #2 – “Your customer will be harassed for payment”
Invoice Finance facilities usually involve informing your customers of the financial arrangement. Apart from this step, InvoiceInterchange would leave your relationship with your customers in your hands. The only time we would step in or reach out to your customers was if there was an issue we are unable to resolve with you in the first place. Other than that, you keep full control of your customer relationship.
Myth #3 – “It is pricey”
Invoice Finance provides flexibility for business owners to draw down funds only as and when needed. There is no minimum fee or contract lock-ins. The interest rate itself is competitive to business loans.
Myth #4 – You have to sell all your invoices
This myth is far from reality. At InvoiceInterchange, you select invoices that you want to fund, as and when you need it. Select one invoice, one customer or the whole ledger if you wish to. So long as it meets your business needs.
Myth #5 – The onboarding process is really tedious
At InvoiceInterchange, our credit assessment is simple, quick, and easy. Simply complete an online application or connect your Xero account and we will do all the work! It is so easy. Once onboarding is completed, you will be able to drawdown funds against your outstanding invoices with funds arriving into your account within 24 hours after invoice submission and verification.
Myth #6 – You need a strong credit rating
It is reasonable to state that the success of obtaining any finance facility is usually reliant on your business credit rating. In contrary, Invoice Finance leverages the strength of your customers’ credit rating and potentially allows you to obtain finance at a much lower interest rate than if you relied on only your own credit standing.
Are you selling products or services to supermarkets, large MNCs or government agencies? Talk to us to find out how we can help speed up payments.
Myth #7 – You should first go to a bank to obtain Invoice Finance
Business owners usually head to traditional banks as a first port of call to obtain business funding. However, there are many more finance options available today, even more so with the recent emergence of Fintech players like peer-to-peer lenders, crowdfunding and online invoice financing. It is essential for you to be aware of and assess all options to see which suits your business needs the best.