We spoke with Bernadine Geary, Director, Cashflow Finance at Fundamental Business Finance, who provided some insights to the...
How “cloud” invoice financing software eliminates cash flow gaps
100% real-time fundingTeam Waddle
Invoice financing is a product that can now integrate directly into your supply chain as a software add-on.
Eliminating payment gaps between the time an invoice is raised and the time customer payments come through, without disrupting existing processes, is critical for improving liquidity and accelerating growth. That’s where invoice financing software kicks in.
[inlinetweet prefix=”” tweeter=”” suffix=”@getwaddle”]Software platforms like Waddle are focused on helping to bring liquidity to business[/inlinetweet] supply chains. Waddle enables companies to pay suppliers and expenses early, by releasing capital tied up in unpaid invoices. Embedding invoice financing software in accounting apps is something that hasn’t before been seen in the Australian non-bank market, allowing dynamic credit limits that fluctuate in real-time with the cash flows of the business.
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How does this type of software work?
By leveraging Application Programming Interface (API) technology, lenders like Waddle are able to automate the entire lending process. Business owners that use cloud accounting are able to link their online accounts to Waddle and opt-in for a two-way data exchange, automating every aspect of the financing.
Benefits of using cloud financing go way beyond the cost
Business owners are now able to self-serve the process of making an application, obtaining an offer and accessing funding. Ongoing administration of the account is almost non-existent, thanks to the data-sharing between accounting and Waddle’s dedicated lending software. SMEs are able to invoice for a job or the delivery of products and draw down funds against these new invoices (assets) the instant they are raised. This gives them the liquidity they require on a day to day basis to pay suppliers, wages and expenses without performing any further processes outside of their normal accounting duties.
How does this finance differ to others?
This type of lending software propels a business forward in time. Credit terms can be offered or extended due to the on-demand nature of the funding. Technically, these facilities operate as a revolving line of credit, able to be drawn down on or repaid as needed. If you compare this to a fixed-term loan which requires set repayments- where business owners need to ensure they can meet certain obligations- it’s a different ‘ball game’, meaning capital once reserved for repayments can be put towards other activities.
SMBs that use an invoice financing product are able to draw down funds without needing to make repayments, with credit lines being replenished as customer payments arrive (unless the SMB wishes to make direct repayments to reduce interest charges). This can be useful in any number of scenarios. Take for example an importer, that only required funding for a week or two until stock arrives: they would able to draw funds and repay them as soon as stock is invoiced to customers. Another example could be a retailer, looking to take advantage of a supplier discount: invoice financing would allow that the retailer to take delivery, invoice customers and repay funds without being tied into a fixed repayment schedule.
What’s the real cost benefit?
SMBs that are growing require constant, steady access to credit lines, to free up their revenue generating potential. Cloud accounting offers a vast array of software add-ons, including tools for inventory, point of sale, payments and cash flow management. Lending is now part of that ecosystem for SMEs, spelling good news for businesses looking to grow.
Got a different view? Let us know below…