Everything you need to know about invoice finance


Could invoice finance could benefit your business? Are you confused by what it is, how it works, and who it works well for? Well there’s no need to be confused any more. If you’re in the dark when it comes to invoice finance, then read on. We’ll share everything you need to know in order to understand if it could work for you and your business. Here’s our 360 look at invoice finance.

answering questions about invoice finance

What is invoice finance?

Invoice finance is a short term finance solution designed to allow companies to access cash which is currently held in unpaid invoices.

How does it work?
The business sells the invoice (or invoices) to their chosen finance company.  The finance company gives the business a % of the invoice value (usually between 80 and 90%), holding on to the rest until the customer pays the invoice.  Once the invoice is paid the finance company collects their fee and pays the remaining cash back to the business.

What attracts companies to use invoice finance?

Invoice finance is fast and flexible, and offers companies control over their funding – giving it a potentially wide appeal.

In order to be able to use invoice finance you must sell goods or services to another business, and manage payment through an invoicing process.

Invoice finance works well in the following situations:
• If a business deals with long payment terms from customers
• Where the available funding is lean and there is cash locked up in unpaid invoices
• For seasonal businesses or businesses who are trying to deal with fluctuating cash flow
• If a company is growing and needs a cash injection to support the growth costs
• Where a business can benefit from having cash available to meet early paying supplier discounts
• For companies who are just starting out or are experiencing growth, and have difficulty meeting traditional lending criteria
• For businesses who have a large percentage of their business with a single or small group of customers.

What are the real benefits of invoice finance?

Invoice finance is a solution to a wide variety of situations. It also comes with a range of benefits that set it apart from other finance products in the marketplace. We asked our customers and referral partners to share the benefits they enjoy from using invoice finance.

• Invoice finance puts you in control of your funding and you only need to borrow the amount that meets your needs. You can choose to finance a single invoice or a group of invoices depending on the level of cash you’re looking for. And as soon as the customer pays the invoice your debt has gone.

• It doesn’t matter if your business has been operating for 5 months or 15 years. You can say goodbye to traditional lending restrictions and real estate security requirements.

• Your funding potential increases as the number of invoices you produce increases. Your growth will not be restricted by fixed asset security, allowing you to grab new opportunities as they happen.

• If signing a new contract with a customer seems off-putting because of long payment terms, then take a look at invoice finance. You can get hold of the money you’ve made when you need it – not when your customer pays. So you can keep on top of your costs whatever your customer’s payment terms.

• Seasonal businesses face a constant challenge juggling income vs. outgoings, and dealing with often extended periods without cash flowing into the business. Invoice finance can make it easier to manage company finances by smoothing the highs and lows and minimising periods without income.

• It’s difficult to plan for the unexpected, but if you face an unplanned for cost or the sudden loss of a customer, invoice finance can give you the funds you need to react and regroup.

• Whether you’re dealing with a partnership, management takeover, floating your company on the stock exchange, or any number of other ownership issues: invoice finance provides an excellent finance solution to support a balanced company structure.

Invoice finance at every stage

Start up

New businesses are notoriously risky to finance, with a success rate of under 10% even before they begin operating. It’s no wonder that attracting investment or organising finance can be such a challenging process.

Invoice finance can provide a valuable tool, allowing you to re-invest earned cash as soon as you start issuing invoices. Consider invoice finance as a solution to allow you to invest in establishing your business with the right equipment, people, raw materials and more.

Growing businesses

Once you enter the growth phase it’s not unusual for the cost of expansion to outstrip the funds you have available. With invoice finance you needn’t be limited in your growth by traditional funding security and inflexible lending criteria. Your potential funds available are governed by the number of invoices you issue, so as you grow so does your funding potential. This means you can harness the opportunities as they arise and keep driving your business forward to the next achievement.

Mature businesses

It’s a common misconception that mature businesses no longer require funding support – but that simply isn’t true. There are a range of needs that can drive mature businesses to seek an invoice finance solution: change of partnership or ownership; investment into new products or markets; growth into new markets. Invoice finance is the ideal tool to support a mature business through these and other challenges.

How can invoice finance benefit different industries?

Many factors can affect a company’s cash flow needs, and some of these are specific to the industry within which they operate. Invoice finance provides a flexible solution across a wide range of cash flow challenges including: labour hire; engineering; earthmoving; transportation; importing; manufacturing; wholesale; and many more. Clients chose Fifo Capital because of the exceptional 1:1 service and the speed and flexibility that it supports. Invoice finance is chosen because there are unique needs that must be met. Here are some industry specific examples of what invoice finance can achieve.

With invoice finance businesses can: finance a stock order until it lands in the country; deal with distribution stock costs; pay deposits and/or meet payment terms; ensure that they can pay their duty and GST bills.

Invoice finance can: make sure that funding is available to manage ongoing operating costs; provide funding to invest in materials for the next job; allow companies to access the cash needed to set up a new contract; make it possible to deal with one-off costs such as repair or maintenance.

Labour Hire
Invoice finance effectively: bridges the cashflow gap that can exist between outward cashflow and money in; makes it achievable to make the most of growth opportunities; ensures businesses can deal with unexpected costs.

Invoice finance creates cashflow flexibility, allowing clients to: deal with the day to day costs of running a business while on the move; manage unexpected costs such as replacing vehicles or managing repairs; fund the growth of the fleet.

Wholesale businesses can use invoice finance to: move quickly for optimum pricing or to secure supplier discounts; manage ongoing costs; initiate and invest in new business opportunities; act fast to secure margins.

Invoice finance can give your business the cashflow flexibility that it needs to drive success. Whatever stage your business has reached, or industry your business is in: you can use invoice finance as a smart finance solution. It’s the adaptability of invoice finance, coupled with the control it gives the companies who are using it, which has resulted in it becoming such a popular choice in the marketplace. If you’re getting to grips with your cash flow and would like to talk with one of our experts about invoice finance – call us today on 086 404 2445.

Introducing Fifo Capital

Fifo Capital provide alternative finance solutions to small to medium sized businesses. If you’re looking for a cash flow boost and would like to enjoy fast turnarounds and one to one service that’s there when you need it – why not contact Fifo Capital today?

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  • Terms and Conditions

    Fifo Capital understands time is critical when it comes to managing your cash flow – so our process is aimed to be as simple as possible.
    A Fifo Capital facility approval typically takes around 24 hours to set-up and depending on the required information supplied by customers, transfer of funds can take place in as little as four hours.

    The following covers the terms and conditions required for a four hour funds transfer to take place;

    1. Fifo Capital will tell the proposed client if the application is successful to receive funding. We can accept or reject the application at our sole and absolute discretion. If we accept the application the cash flow finance services will be provided solely in accordance with the documents we agree with the proposed client.
    2. Fifo Capital reserves the right to reject previously approved applications without notice and/or consultation.
    3. Fifo Capital’s application consists of a number of forms, however, not limited to fully completed and signed; Application, Receivables Finance Facility Terms and Conditions, Guarantee, Offer to Sell, and Privacy Consent forms
    4. To be eligible for a four hour funds transfer in relation to an approved application, the proposed customer must request or apply to Fifo Capital in writing before 12noon on the same business day. Such a request doesn’t guarantee the transfer will take place or funds cleared in the customer’s bank account within the four hour period.
    5. Should a four hour funding transfer request be approved, such a transfer can only be facilitated on a business day. A transfer request is not available on public or bank holidays, or weekends.
    6. Four hour funding transfers may incur a fee as detailed within the application.
    7. Fifo Capital’s aligned banks or financial institutions have the right to reject a four hour funding transfer request. Fifo Capital and its aligned banks are not liable for any loss or damages resulting from a funding transfer request not taking place or funds being cleared within a four hour period.
    8. Fifo Capital is a franchise business operation. Fifo Capital UK Ltd is the master franchisee and is therefore not responsible for the actions or inactions of its franchisees in relation to any funds transfer timing.
    9. Fifo Capital is not responsible for any loss or damages incurred or to be incurred by the would be or existing customer should a transfer not take place within or cleared funds not be received within a four hour period.

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