The aftermath of the recent pandemic has left many businesses in uncomfortable positions. Invoice finance is just among the options that entrepreneurs should look into to recuperate their businesses and avoid closing down.
Unfortunately, with all this happening, some entrepreneurs are left with no choice but to explore options that are as drastic as firing employees or even downsizing just to stay afloat.
With proper research, businesses actually don’t necessarily have to experience unnecessary distress as there are options that they can explore that don’t entail firing people to the very least.
That’s where business loans come in. In particular, invoice finance is just one of these options that entrepreneurs can consider at this time of high uncertainty.
Businesses that reach at least 3-5 million annual turnover, invoice finance can give them economic relief and stay in the business for the time being.
What exactly is invoice finance?
As previously mentioned, it is a business loan that entrepreneurs who experience financial woes can avail of. It is a form of debtor finance that primarily aims to increase cash flow of a company without resorting to high-interest mortgages and the need to tie in a lot of directors' assets.
While many consider this as a loan, it is technically a financial alternative that provides financial relief to businesses who have troubles staying afloat. It is also ideal for businesses who want to increase their cash flow.
How does it work?
It is undertaken by companies to increase cash flow by selling their receivable sales (invoices) to factoring or debtor companies on a discount.
It is a form of financing that primarily targets businesses that experience economic problems related to their operations.
This can also provide financial relief a means to finance important business operations related expenses from salary to day-to-day expenses of the business
To avail, businesses can take out a loan with their receivable cash from issues invoices as the security. Upon submission of the required requirements, the company can have these issues invoices into cash within a day or two--depending on the lender.
Since this facility primarily aim to address immediate finance-related concerns of small to medium-sized firms, the turnaround time is usually faster than other loans.
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Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today!
