How to spot an invoice finance deal

Close up photo of paperwork, a pen and calculator with the word 'invoice' shown in the corner of a piece of paper

The need for finance often arises from growth opportunities. Whether it is a truck to support that new contract or a new printer for organic growth, your average businessman knows what types of finance are available. Not so with cashflow finance. So, as a broker, how do you spot an invoice finance deal?

When an SME needs cashflow finance, their first thought is usually a bank overdraft. But an overdraft is inappropriate for full cashflow support for many reasons, including the common need for mortgage security and the fact that the amount available is restricted and won’t grow with business needs.

Invoice finance is much more appropriate for a growing business as the availability increases in line with business growth. In addition, there is no need for real property security. Unfortunately, many businessmen don’t recognise that invoice finance is the answer to their cashflow finance needs.

This is where a businesses broker or accountant comes in. But again, they need to be on the ball to recognise the need. So how do you spot a business that could benefit from invoice finance?

Industries that commonly use invoice finance

  • Labour and professional hire
  • Transport
  • Manufacturing
  • Wholesale
  • Trade supplies
  • Printers
  • Equipment hire
  • Rag trade
  • Traffic control
  • Computer supplies
  • Building services

Signs that a business might need invoice finance

  • The business has a large order, or potential order, but doesn’t have the cash or supplier credit to proceed
  • The business isn’t growing
  • Payables are overdue, resulting in pressure from the suppler or even stop supply
  • Tax obligations are overdue, resulting in non-lodgement of BAS/IAS or pressure from the ATO
  • Superannuation obligations are in arrears
  • Prospect complaining that customers, or one large customer, is always pays past due
  • Bounced cheques

Most brokers would have clients on their books that they could easily recognise as being likely to benefit from invoice finance. So, start mining that database of yours to lok for an invoice finance deal and get more commission flowing.

Learn more:

Call us on 1800 FUNDIT (386 348) to hear more about how invoice finance can help your clients take control of their cashflow.

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